Rio Tinto Q2 iron ore output surges

Takeover target Rio Tinto says iron ore production surged 13 per cent in the second quarter, alongside record jumps in mined copper and alumina output, recovering some of the gains lost to cyclones earlier in the year and increasing pressure on suitor BHP Billiton to increase its $145 billion all-share takeover offer. But the global miner reported an 18 per cent drop in refined copper output, due to lower yields at some operations and other industrial staples. Rio Tinto said local iron ore production was 48 million tonnes, up 14 per cent compared with the second quarter of 2007, on expanded capacity from its global operations. It expects ore production to hit 200 million tonnes later this year. Chief executive Tom Albanese also warned that costs to staff mines and run equipment were rising along with soaring prices for copper, aluminium, iron ore and coal. The gains in iron ore came despite an explosion at an Australian gas plant that knocked out two-thirds of gas supplies to Rio Tinto's Australian mines, chief executive Tom Albanese told reporters in a conference call. "To date, Rio has mitigated the effect through reordering maintenance, arranging alternative suppliers and the use of higher priced diesel generation," Mr Albanese said. He added that the company would not hedge its energy costs by bidding for oil and gas producers, The Sydney Morning Herald reports. According to the report, Mr Albanese said the rising price of oil shale and tar sand assets, which it had examined over the years, made them less than attractive. Rio Tinto's coal unit Coal & Allied Industries also reported solid results, with second quarter production and export sales were in line with allocated port capacity. "These strong results show that we are continuing to expand to meet rapid demand growth in the developing world. We have set quarterly production records for iron ore, mined copper and alumina, thanks to increasing investment in growth projects and a management commitment to deliver more tonnes faster, while maintaining our focus on safety and costs," Mr Albanese said. “The integration of Alcan is proceeding to plan and the business continues to perform well. I am particularly pleased to see how swiftly our Australian coal operations recovered from the first quarter floods. “Chinese GDP is continuing to grow at around ten per cent per annum, demand is strong while supply remains constrained. Fundamentals, not financial speculation, are driving the record prices we are realising across aluminium, copper, iron ore and coal and we see the same trends continuing into the future,” he added. At Rio Tinto's 30 per cent-owned Chilean Escondida mine, the world's largest copper mine, Rio Tinto's share of mined copper rose 22 per cent, though refined production suffered from trucking and shovelling curtailments. Alcan integration on target The miner said that its Alcan integration was on target, with Rio Tinto Alcan's bauxite production up 100 per cent, alumina up by 231 per cent and aluminium up by 374 per cent, compared with the second quarter of 2007, On a proforma basis the respective increases for bauxite, alumina and aluminium were 11 per cent, nine per cent and one per cent, the company said. It also saw a 374 per cent rise in aluminium output over the period but a 1 per cent fall versus the previous quarter. Rio Tinto acquired Canadian aluminium group Alcan last year. Australian thermal and coking coal production was up 15 per cent and 25 per cent respectively. Coal & Allied Production in line Coal & Allied said total coal production for the second quarter was at 4.8 million tonnes while sales for the period stood at 4.6 million tonnes. In a separate statement to the ASX, Coal & Allied said coal production was higher than the comparable quarter last year because of the impact of the 2007 June floods in the Hunter Valley. It also said that the proportion of semi soft coking coal production was increased at Hunter Valley Operations to take advantage of the stronger semi soft market. "Semi soft prices have not yet been agreed with customers, and at June 30 June, 2008 approximately 1.37 million tonnes of semi soft coal sales had been provisionally priced within a range of $US200-$US220/tonne," the company said. Coal & Allied also completed a 60 day dragline overhaul at its combined Mount Thorley Warkworth operation in the quarter. Rio Tinto shares closed at $121.44, down 56 cents or 0.45 per cent, while suitor BHP Billiton shares ended the day at $39.29, down 0.17 per cent. Source: Business Spectator