In its first quarter operations review, Rio Tinto (ASX:RIO) revealed shipments increased by 9 per cent while production increased 12 per cent compared to the corresponding quarter a year earlier. Compared to last quarter its iron ore shipments fell 12 per cent while its production fell 6 per cent from 4Q2014 to 1Q2015. Global iron ore shipments came in at 72.5m tonnes while production came in at 74.7m tonnes. Both figures include joint venture shipments and production. Aluminium production was in line with the corresponding period of 2014, despite the partial shutdown at Kitimat. Aluminium production fell the least, dropping 2 per cent from 4Q2014. The company also report strong growth in coal production, mainly due to improved efficiencies at Kestrel South, ramped up production at Mount Thorley and Warkworth, and higher thermal production at Hail Creek.
The World Steel Association said that China, the world’s largest importer of iron ore, would decrease its demand for steel both this year and in 2016. Rio Tinto’s production fell short of the 82.7m tonnes that analysts had projected for the miner. The miner’s shipments also fell short of the projected 82.2m tonnes. Rio cited wet weather conditions caused by cyclone Olwyn and a train derailment that inhibited the passage of iron ore into a port. Nevertheless, the company has reaffirmed its guidance to ship 350m tonnes in the 2015 calendar year, which would be 16 per cent higher than the 2014 calendar year. The price for the steel-making commodity has slightly recovered to US$51.57 on Tuesday after dropping below the US$50 mark earlier this month. Rio Tinto believes that it will be able to make about US$17 per tonne at current prices.
Shares of RIO are up 87.5c, or 1.60 per cent, at $55.54 per share near the end of trading hours on Tuesday. Shares of the mining company have fallen 12.39 per cent in the last 12 months and 4.28 per cent so far this year.
Author: Imran Valibhoy
Apr 21, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.