A strong second quarter for Rio Tinto saw the mining giant achieve record iron ore production in the first half, but shares fell on Tuesday morning after the firm reported that output had exceeded sales.
First-half iron ore output of 120m tonnes (94m tonnes attributable) and shipments of 115m tonnes were both 4% higher than the first half of 2011 as the group's Pilbara mines achieved record production. In the second quarter alone, the company produced 62m tonnes of iron ore (49m tonnes attributable), flat year-on-year.
Production continued to exceed sales as it prepares itself for the expansion to 283m tonnes per annum (Mt/a) by the end of 2013, rising to 353 Mt/a by the first half of 2015. Rio expects to produce around 250m tonnes of iron ore in 2012 as a whole, though this is subject to weather constraints.
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Meanwhile, mined copper production was 5% than the second quarter of 2011, primarily driven by processing efficiencies and higher copper grades at Escondida. Bauxite and alumina production were 8% and 5% higher than last year, respectively, while aluminium was 12% lower due to a labour dispute that has now been resolved. Hard coking coal output rose 13% and thermal coal production was flat.
"Global economic conditions and sentiment dropped markedly in the second quarter. We are keeping a close eye on the pace of the US recovery, the continuing Eurozone crisis and the impact of efforts to stimulate the Chinese economy on the markets that we serve," said Chief Executive Tom Albanese.
"Our investment programme remains resilient to this market volatility, as our tier one projects are robust under any probable macroeconomic scenario."
Pre-tax and pre-divestment expenditure on exploration and evaluation was $1,025m, up from $449m the year before, 40% of which sourced from copper, 30% from iron ore, 12% from energy, and the rest from diamonds and minerals, aluminium and central exploration.
Shares dropped 0.54% to 2,970p in the opening minutes of trade on Tuesday.
BC
