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 [email protected]