Rio Tinto output drops but metal prices buoyant

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Rio Tinto PLC (LON:RIO) said it expects iron ore and copper shipments to remain at the low end of guidance after declines in output of both metals in its latest quarter.


Costs are also rising said the miner with iron production costs this year up by 4% due to rises in diesel and labour, costs related to mine heritage management and Coronavirus (COVID-19).


Shipments of iron dropped by 12% in the three months to June and Rio Tinto said it is struggling to get skilled staff due to COVID-19 restrictions.


Iron ore production at Pilbara in Australia dropped by 9% to 75.9mln tonnes in the quarter due to a combination of heavy rainfall, COVID-19 and cultural heritage issues.


Copper production dropped 13% to 115,500 tonnes with lower recoveries at Escondida and a slope failure at Kennecott.


Bauxite production dropped by 6% while production of titanium dioxide at Richards Bay in South Africa has been halted following the fatal shooting of the site’s manager Nico Swart on his way to work.


Prices though are still in the miner’s favour, with iron ore more than double a year ago, copper up 77% and aluminium up 53%.


Going forward, Rio said iron ore shipments this year will be at the low end of the guidance range of 325-340Mt (331mt).


Mined copper and bauxite production is expected to be at the low end of the guidance ranges of 500-550,000 (528k) tonnes and 55-59 Mt 9 (56) respectively.


There is no guidance for titanium dioxide due to the escalation in the security situation at Richards Bay.


Jakob Stausholm, chief executive, said: “The global economy, in particular China, recovered strongly and we are intensely focused on servicing our customers with as much product as we can.


“However, we faced some challenges in the first half notably at our Pilbara operations, which were impacted by replacement mine tie-ins and materially higher rainfall. “


Rio Tinto added that a year on from the destruction of the Juukan Gorge rock shelters it had “reflected on the magnitude of what was lost by our actions, and that the hurt we have caused will never be forgotten”.


Stausholm added: “Our first-half performance has reaffirmed my belief that we have identified the right priorities to strengthen the business: to become the best operator, strive for impeccable ESG credentials, excel in development and secure a strong social licence.”

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