Mining giant Rio Tinto (RIO: Quote,RIO.L) reported second quarter iron ore production that was almost flat with last year, but increased sequentially, even as economic conditions deteriorated notably. Unfazed by the global economic uncertainties, the company confirmed its production forecast for the year.
Meanwhile, traders weren't impressed and sent the company's shares lower on the Australian exchange.
Second quarter global iron ore production was 62 million tonnes, in line with last year, the firm said in a statement Tuesday. Iron ore accounts for roughly two-thirds of the profit of the company. Attributable production totaled 48.63 million tonnes compared to 48.85 million tonnes last year and 45.64 million tonnes in the previous quarter.
CEO Tom Albanese said, ''Global economic conditions and sentiment dropped markedly in the second quarter...Our investment programme remains resilient to this market volatility, as our tier one projects are robust under any probable macroeconomic scenario."
The miner said it is closely watching the pace of the US recovery, the Eurozone crisis and the impact of efforts to stimulate the Chinese economy on its markets.
China, the main customer for iron ore, is said to be experiencing a dip in demand for the steel-making material as the government tries to cool off the economy. However, Fitch Ratings said in a report late Monday that the Chinese economy is likely to achieve a "soft landing" despite a considerable slowdown in economic growth. The government's investment-led strategy backed by monetary easing may help avoid a "hard landing" in the short term, it said.
For the first half of the year, iron ore production rose 4 percent to 120 million tonnes and shipments also climbed 4 percent year-over-year to 115 million tonnes. Rio Tinto's attributable output for the period grew 4 percent to 94.27 million tonnes.
The Pilbara mines achieved record production in the first half and output continued to exceed sales. The expansions of the Pilbara to 283 million tonnes per annum by the end of 2013 and 353 million tonnes per annum by the first half of 2015 are on track.
Rio Tinto still expects to produce about 250 million tonnes from its global operations in Australia and Canada in 2012, subject to weather constraints.
Mined copper production advanced 5 percent in the second quarter, primarily driven by processing efficiencies and higher copper grades at Escondida.
Bauxite output rose 8 percent and alumina production climbed 5 percent from the second quarter of 2011. However aluminum output was 12 percent lower from last year, reflecting the shutdown of two thirds of capacity at Alma, due to a labor dispute that has now been resolved.
Hard coking coal production increased 13 percent, while thermal coal production was consistent with last year. Titanium dioxide feedstock production increased 5 percent year-over-year.
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by RTT Staff Writer
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