CAPITAL MARKETS

Rio output weaker across the board

Softer Rio production due to wet weather

Kristie Batten
Rio output weaker across the board

Iron ore shipments, on a 100% basis, were 76.7 million tonnes, in line with the same quarter of last year, but down 13% on the December quarter.

The company said ship-loading was suspended on a number of occasions by cyclone activity, with heavy flooding across several sites, including the rail network.

Full-year guidance was left unchanged at 330-340 million tonnes.

Mined copper production of 84,200 tonnes was down 37% year-on-year and quarter-on-quarter due to the strike at Escondida and the curtailment of production from Grasberg.

Oyu Tolgoi output also dropped by 34% year-on-year and 16% quarter-no-quarter, due to lower grades.

Kennecott production was up by 29% on the same period of 2016 due to higher throughput.

Rio has downgraded its 2017 guidance for mined copper to 500,000-550,000t from 525,000-665,000t.

Hard coking coal production of 1.58Mt was down 20% year-on-year and 28% quarter-on-quarter due to the timing of the longwall changeover at Kestrel, as well as processing rates at Hail Creek.

The company left guidance unchanged as it continues to assess the impacts of Cyclone Debbie.

Semi-soft coking coal production was down 18% over the same quarter of last year due to mine production sequencing in the Hunter Valley and at Mount Thorley Warkworth, while thermal coal output of 4.2Mt was up 11% due to higher productivity.

Bauxite and aluminium output were each up by 2% year-on-year, but 7% and 3% lower respectively when compared to the December quarter.

Rio CEO J-S Jacques said the production result was solid, despite challenging weather conditions in Western Australia and Queensland.

“Our strategy is unchanged. Our number one priority is safety,” he said.

“We maintain our disciplined approach to capital management and maximising cashflow, with a focus on managing costs and enhancing productivity across the business.

“These actions support the delivery of strong cash returns to shareholders in the short, medium and long-term.”

Pre-tax exploration and evaluation expenditure for the March quarter was US$78 million, down from $128 million in the same quarter of 2016.

Rio is actively exploring in 14 countries for eight commodities, but the bulk of the focus in the March quarter was on copper targets in Australia, Botswana, Chile, Kazakhstan, Namibia, Peru, Serbia, Zambia and the US.

Shares in Rio closed at A$58.90 yesterday and rose slightly in London overnight.

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