Rio Tinto (LSE:RIO)
Historical Stock Chart
3 Months : From Mar 2019 to Jun 2019
By Robb M. Stewart
MELBOURNE, Australia--Rio Tinto PLC (RIO.LN) scaled back its 2019 target for iron ore production after operations in Australia's remote Pilbara region were slugged by cyclones that compounded the earlier hit to shipments from a port fire at the start of the year.
The British-Australian company, one of the world's biggest mining companies and top exporters of steel ingredient iron ore, said it is braced for ongoing disruptions to shipments after Tropical Cyclone Wallace hindered recovery work from the damage to its port facilities caused by the earlier Tropical Cyclone Veronica last month.
As a result of a further assessment of the damage to the port, the mining company said shipments from the Pilbara operations in northwest Australia were now expected to be between 333 million and 343 million metric tons. It cautioned that a recovery in the second quarter of the year remained subject to weather conditions.
The company has maintained a focus on raising iron ore output after a multiyear expansion, betting it can make strong margins over the long run from a market it relies on for the bulk of its earnings. Disruptions to Australian exports in recent weeks have helped support spot-market prices for the commodity, which had been buoyed by disruptions to Vale SA's (VALE) mines in Brazil in the wake of a dam disaster in January.
Rio Tinto late last month cautioned annual iron ore shipments from the Pilbara would be at the low end of a 338 million-350 million tons target range after operations at its Cape Lambert A port facility were disrupted by Tropical Cyclone Veronica. That compounded a hit of roughly 14 million tons in lost production at Cape Lambert in January after facilities were damaged by fire.
Shipments of iron ore from operations controlled by Rio Tinto in the Pilbara dropped by 14% year-over-year to 69.1 million tons in the first quarter, while production was down 9% on year at 76 million tons.
Still, Chief Executive Jean-Sebastien Jacques said the first-quarter operational performance in Rio Tinto's other products was solid and generally higher than last year.
Among other products, the company's aluminum production for the quarter was broadly flat on a year earlier, while mined copper output was up 3% on-year at 143,900 tons. On Monday, Rio Tinto committed US$302 million in additional capital to its Resolution copper project in Arizona, which counts BHP Group Ltd. (BHP.AU) as a partner, to fund further drilling, ore-body studies and improving infrastructure. When fully operational, the company expects Resolution will have the potential to supply almost 25% of U.S. copper demand.
First-quarter production from Rio Tinto's Iron Ore Co. of Canada was 5% higher at 2.5 million tons, which the company said was despite adverse weather denting output in February.
Less than two months ago, Rio Tinto offered up bumper returns to its shareholders with plans to hand out US$13.5 billion in capital for 2018, including a special dividend of US$4 billion. The payout was underpinned by a 56% jump in annual net profit, thanks in part to the sale of assets including a stake in an Indonesian copper mine.
Write to Robb M. Stewart at firstname.lastname@example.org
(END) Dow Jones Newswires
April 15, 2019 19:26 ET (23:26 GMT)
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