Rio Tinto posts mixed bag of production results

Rio Tinto has increased production in most areas, but further declines in copper production let the company down.

The FTSE 100 listed mining company released its third quarter production results on Friday that showed it increased iron ore shipments and production for the quarter by 17% and 12% to 91.3m and 86.1m tonnes respectively.

The increase was helped by the completion of key elements of the Pilbara infrastructure expansion.

Bauxite production also increased 4% to 11,287 kiltonnes for the quarter, and hard coking coal increased 5% to 1,856 kilotonnes.

However another decline in copper production tainted the most positive results, with mined copper down 24% from the same period last year to 115 kilotonnes.

Total copper production for the year to date sat at just 393 kilotonnes - down 17% on the previous year. Credit Suisse called this a "sizeable miss".

Mike van Dulken, Head of Research at Accendo Markets, said it detracts from the positive iron ore numbers.

“While a decent headline grabbing statistic, and suggestive of growth, it is unfortunately easily countered by copper production, underscoring weak demand for the key industrial metal.

“A cut to copper production guidance towards the lower end of the prior range will help restrict supply and keep the price of the red metal off six year lows.”

However the company said that mined copper was still on schedule to meet full year guidance of around 510 thousand tonnes, with the Oyu Tolgoi mine benefiting from higher grades and Kennecott continuing its focus on the east wall de-weighting and de-watering.

Titanium dioxide slag production also dropped 34%, down to just 243 kilotonnes for the quarter.

Rio Tinto chief executive Sam Walsh said the company continues to deliver efficient production, rigorous cost control and sound allocation of capital.

“This approach is ensuring that our tier one assets generate substantial free cash flow even during a challenging economic environment. Our expanded Pilbara infrastructure is in place, and the iron ore product group is successfully commissioning and testing the system, reflected in the increased iron ore shipments to our customers during the period.”