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Rio Tinto Q2 Iron Ore Shipments Down 3%; Says Mongolia Copper Mine To Cost More

Anglo-Australian mining giant Rio Tinto Plc (RTNTF,RIO,RIO.L, RTPPF) reported that Pilbara iron ore shipments in the second quarter were 3% lower than last year, due to recovery works following Tropical Cyclone Veronica. It reaffirmed its full-year shipment guidance.

The estimated cost of the company's underground copper mine in Mongolia increased up to $1.9 billion, and its first sustainable production could now be delayed by 16-30 months as mine design complications at the Oyu Tolgoi underground copper project, Rio Tinto said in a statement.

Meanwhile, Rio Tinto reported that Pilbara iron ore shipments of 85.4 million tonnes--100% basis-- in the second quarter were 3% lower than the second quarter of 2018. The shipments were impacted in April due to recovery works following Tropical Cyclone Veronica.

Rio Tinto said in June that it reduced Pilbara iron ore shipments guidance for fiscal year 2019 to a range of 320 million tonnes - 330 million tonnes from the previous outlook of 333 million tonnes - 343 million tonnes. But the company today reaffirmed its full-year shipment guidance.

The company said that Pilbara operations produced 79.7 million tonnes of iron ore in the second quarter, seven per cent lower than the previous year.

Bauxite production of 13.4 million tonnes in the second quarter was 1% higher than the same period of 2018.

Aluminium production of 0.8 million tonnes was in line with the second quarter of 2018.

Rio Tinto, in an update on the schedule and cost of the Oyu Tolgoi underground project in Mongolia, said that enhanced geotechnical information and data modelling suggested that there may be some stability risks identified with the approved mine design and so a number of other mine design options are also under consideration to complete the Project.

Preliminary information now suggested that, depending on which mine design options are adopted, first sustainable production could be achieved between May 2022 and June 2023, a delay of 16 to 30 months compared to the original feasibility study guidance in 2016.

Rio Tinto now estimates the capital spend for the Oyu Tolgoi underground project to be $6.5 billion to $7.2 billion, an increase of $1.2 billion to $1.9 billion from the $5.3 billion previously disclose.

Separately, Rio Tinto said it completed the sale of its entire interest in the Rössing uranium mine in Namibia to China National Uranium Corporation Limited for an initial cash payment of $6.5 million plus a contingent payment of up to $100 million.

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