Rio Tinto 2Q Iron-Ore Shipments Lift, Capex View Revised
17 July 2020 - 9:04AM
Dow Jones News
By David Winning
SYDNEY--Rio Tinto PLC said its iron-ore shipments rose by 1% in
the three months through June as it capitalized on strong prices of
the steelmaking ingredient, although production of other key
commodities was mixed.
The miner said it shipped 86.7 million metric tons of iron ore
in its fiscal second quarter. Half-year shipments were 3% higher
than a year earlier at 159.6 million tons and were achieved despite
damage to infrastructure such as access roads, accommodation and
power lines caused by Tropical Cyclone Damien in February.
Rio Tinto said it continued to expect annual iron-ore shipments
of between 324 million tons and 334 million tons.
Management said it now expected capital expenditure of around
US$6 billion this year, narrowing an earlier forecast of between
US$5 billion and US$6 billion. That reflected "an appreciation in
our major operating currencies against the U.S. dollar since the
first quarter and a reduced impact of Covid-19 on both sustaining
and development expenditure," the company said.
Iron-ore prices this month topped US$110 a ton after supply from
Brazil was disrupted by the spread of the novel coronavirus and
demand strengthened in China, the world's top buyer of the
commodity. On Thursday, China said its economy grew 3.2% from a
year earlier in the second quarter, as authorities benefited from
an aggressive campaign to eradicate the virus within its
borders.
Mining executives say key indicators, such as utilization rates
at steel mills, have recovered to levels before coronavirus
pandemic. Steel inventories are also falling from high levels,
signaling demand has gotten stronger.
The World Steel Association, an industry group, expects Chinese
steel demand to increase by 1.0% this year, despite the early
disruption to manufacturing. Infrastructure projects begun this
year will also support steel consumption in 2021, it says.
Still, the virus pandemic has forced Rio Tinto to shutter some
operations temporarily, reduce output at others, and rethink how it
staffs operations that have traditionally relied on open borders to
bring in mineworkers from far away.
On Friday, Rio Tinto said capital expenditure for next year and
2022 is expected to be around US$7 billion annually, up from a
prior forecast of US$6.5 billion per year. "This includes spend
from 2020 that has been rephased as a result of Covid-19
restrictions," the company said.
Among its other commodities, Rio Tinto said quarterly bauxite
output rose by 9% to 14.6 million tons while copper production
dropped by 3% to 132,800 tons and aluminum output fell by 2% to
785,000 tons.
Write to David Winning at david.winning@wsj.com
(END) Dow Jones Newswires
July 16, 2020 18:49 ET (22:49 GMT)
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