June half iron ore production jumped 7% year-on-year to 160.5 million tonnes, while shipments were also up 7% to 161.7Mt.

The Pilbara iron ore division produced 81.3Mt in the June quarter, up 3% YoY, as Gudai-Darri continued to ramp up.

Shipments of 79.1Mt were 1% lower due to port maintenance and a train derailment.

Rio expects full-year shipments to be in the upper half of the guidance range of 320-335Mt at cost guidance of US$21-22.50 per tonne.

"Iron ore production now expected in the top end of the range suggests the company is now back on top of the Pilbara operations which should allow investor confidence on the operational side to continue to improve, albeit iron ore markets appear to be sufficiently supplied," RBC Capital Markets analyst Tyler Broda said.

The average pricing achieved in the first half was US$107.20 per dry metric tonne.

Copper

Mined copper for the June quarter and half was flat at 145,000t and 290,000t, respectively.

Rio said the benefits from the ongoing ramp-up of the Oyu Tolgoi underground in Mongolia was offset by the decline in production at Kennecott in Utah due to a conveyor failure in March, and unplanned maintenance, and lower crusher and conveyor availability at Escondida in Chile.

The company lowered refined copper guidance to 160,000-190,000t from 180,000-210,000t and lifted its cost guidance to $1.80-2 per pound from $1.60-1.80/lb due to delays in completing the rebuild of the Kennecott smelter.

The rebuild is now expected to be completed in September, a month later than previously planned, due to the addition of a full rebuild of the flash converting furnace to improve asset stability.

Other downgrades

Rio chief executive Jakob Stausholm pointed to the positive momentum in the Pilbara iron ore business and the ramp-up of the Oyu Tolgoi underground mine ahead of plan as positives for the quarter.

"Production downgrades during the quarter highlight that we still have much more to do elsewhere, as we roll out the Safe Production System to create stability and achieve excellence across our global portfolio," he said.

Full-year bauxite production is expected to be at the lower end of the 54-57Mt range, while alumina guidance was lowered to 7.4-7.7Mt from 7.7-8Mt. Aluminium guidance was unchanged at 3.1-3.3Mt.

Titanium slag production for 2023 is expected to be at the lower end of the 1.1-1.4Mt range.

Guidance at Iron Ore Company of Canada was lowered to 10-11Mt from 10.5-11.5Mt.

Development projects

"We continued to take disciplined measures to grow in the materials the world needs for the energy transition, with investments to expand our low carbon aluminium production and increase our underground copper production at Kennecott," Stausholm said.

Exploration and evaluation spend for the June half was $710 million, 94% higher YoY due to the ramp-up of work at the Simandou iron ore project in Guinea and Rincon lithium project in Argentina.

Rio spent $318 million at Simandou in the half and has transferred management responsibility for the project to the chief technical officer.

The company continues to review its $140 million capex estimate and schedule for the pilot plant at Rincon and had no update on the stalled Jadar project in Serbia.

It spent $112 million on its battery materials projects in the half.

In copper, $68 million was spent at Resolution in the US and $32 million at Winu in Western Australia.

"Rio Tinto continues to focus on its organic growth pipeline and ramping up Oyu Tolgoi which should accelerate into H2 (Simandou and Rincon)," Broda said.

Half-year results due next week

Rio reported a cash outflow from an increase in working capital of about $900 million, reflecting a build in blasted and mine stocks in the Pilbara and higher spares and stores.

Payables were also lower due to the timing of spend and normal volatility in amounts due to joint venture partners and employees.

It said operational cashflow was impacted by a halving in dividends (to $300 million) from Escondida.

"Rio, like most other miners, is now back in mark-to-market consensus earnings upgrade territory and is one of our preferred miners for the short term," Jefferies analyst Christopher LaFemina said.

Rio was trading 0.3% higher at A$117.22 this morning.