Rio Tinto Benefits From High Prices for Premium Ore -- Commodity Comment
17 July 2018 - 11:08AM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--Rio Tinto PLC (RIO.LN) on Tuesday published its
half-year operations report, in which the miner recorded a sharp
rise in iron-ore shipments, particularly for premium products
currently in demand among China steelmakers. Here are some remarks
from the company's report.
On Pilbara iron ore output:
"Pilbara operations produced 168.7 million tons (Rio Tinto
share: 140.5 million tons) in the first half of 2018, 7% higher
than the same period of 2017. Second-quarter production of 85.5
million tons (Rio Tinto share: 71.5 million tons) was also 7%
higher than the second quarter of 2017, reflecting favorable
weather conditions compared to last year, the ramp-up of
Silvergrass and the ongoing implementation of productivity
improvements across the integrated system."
On 2018 iron-ore exports:
"As a result of the strong performance in the first half, Rio
Tinto's Pilbara shipments in 2018 are expected to be at the upper
end of the existing guidance range (330 to 340 million tons, 100%
basis). For the current year, shipments are expected to be more
evenly distributed between the first and second halves compared to
prior years, when shipments have typically been skewed to the
second half following seasonal disruption in the first half."
On iron ore prices:
"The continued improvement in productivity and flexibility
across the system enabled Rio Tinto to benefit from strong lump
premiums during the first half, with record lump sales achieved in
the second quarter. Achieved average pricing in the first half of
2018 was $57.9 per wet metric ton on an FOB basis (equivalent to
$63.0 per dry metric ton). In 2017, the full year price achieved
was $59.6 per wet metric ton (equivalent to $64.8 per dry metric
ton)."
On aluminum contracts:
"Following the announcement by the United States Treasury
Department on April 6, 2018, that it was implementing sanctions on
various Russian individuals and companies, Rio Tinto announced on
April 13, 2018, that it had reviewed arrangements it had with
impacted entities and was in the process of declaring force majeure
on certain contracts. However, the wind-down period was extended
until Oct. 23, 2018, and no force majeure declarations have been
made to date. Rio Tinto continues to monitor this situation
closely."
On aluminum cost pressures:
"As previously guided, significant raw material cost headwinds
have been experienced by the aluminum business, with the impact
during the first half of 2018 already considerably exceeding the
full year 2017 impact. This is expected to continue into the second
half of 2018."
On Escondida copper production:
"Second quarter mined copper production at Escondida was 35%
higher than the same period of 2017, with first half production
being 92% higher than the first half of last year, which was
impacted by a labor union strike. This performance also reflects
the ramp-up of Escondida production to nameplate capacity following
commissioning of the Los Colorados concentrator in the second half
of 2017. Escondida's current labor agreement expires on Aug. 1,
2018, and negotiations for a new agreement are in progress."
On diamond production:
"At Argyle, carat production was 8% higher than the second
quarter of 2017 due to an increase in tons processed following
improved plant availability. At Diavik, carats recovered in the
second quarter of 2018 were 3% higher than the corresponding period
in 2017 due to higher plant throughput. Development of the A21
project is ahead of schedule with first ore uncovered in March and
the mine is expected to be at full production capacity during the
fourth quarter of 2018."
-Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
July 16, 2018 20:53 ET (00:53 GMT)
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