Rio Tinto’s quarterly iron-ore output hits record high

RIO Tinto Group, the third-largest mining group, said yesterday its iron- ore output rose 8% to a record high in the second quarter, and it expected further recovery in Chinese steel demand for the rest of the year. Rio stock rose 84 p, or 4,2 %, to 2104p before midday in London yesterday, taking this year’s gain to 68%. In Sydney, Rio was 2% up at A50,08 at close of trade. The June quarter output of iron ore, the biggest contributor to profit, was 45,2-million tons, up from 41,9- million tons a year earlier. Rio said output for the year would be 200-million tons. CEO Tom Albanese cut aluminium, coal and diamond output as the global slump sapped demand in China, the largest metals consumer, and pushed world prices lower. Markets remained difficult in the second quarter, particularly in aluminium, the London-based group said. “In this environment the results seem positive,” said Tim Dudley, an analyst at Arbuthnot Securities in London. “The issues relating to the aluminium business are beginning to come into focus.” Rio said its aluminium output fell 5% in the quarter, and would drop 6% to 3,8-million tons for the year. Annual production capacity would fall 12%. Output of alumina, refined from bauxite ore and used to make aluminium, fell 6%. Bauxite plunged 14%. Production cuts had begun to take effect, Albanese said. “We continue to press ahead with actions to reduce cost across the board, align production with demand and bring down levels of net debt.” Rio reported record iron-ore production from mines in Western Australia’s Pilbara of 42-million tons, up 11% from a year ago. Sam Walsh, head of Rio’s iron-ore unit, said in April the group expected sales to improve this quarter as China’s stimulus measures spurred demand. The country’s iron-ore imports rose 3,4% last month to the second-highest this year, according to Chinese customs figures. Albanese last month spurned a 19.5bn investment from the Aluminium Corporation of China in favour of raising 21bn from a share sale and an iron-ore venture with BHP Billiton . The group continues to dispose of assets. It sold part of its Alcan packaging unit to Bemis for 1,2bn last week. Mined copper production was little changed. While more metal was retrieved from ore at the Kennecott operation in the US and the Grasberg mine in Indonesia, this was countered by lower metal grades and “continued operational issues” at Escondida, the world’s largest mine. A 45-day concentrator shutdown to fix the mine’s mill was planned for this month and next, Rio said. The company would produce 780000 tons of mined copper and 425000 tons of refined metal this year. Rio owns 30% of Escondida, which is operated by Melbourne- based BHP, and 40% of Grasberg, managed by Freeport-McMoRan Copper & Gold. Australian coking-coal output fell 7% while thermal coal, burned at power stations, rose 3% . Bloomberg