Rio Tinto posts mixed production results amid $5bn divestment programme

The FTSE 100 company said bauxite production of 12.7 million tonnes was 12% higher than the corresponding quarter last year, which it put down to continued operational improvements.

Third party shipments increased by 19% to 8.2 million tonnes, due to firm demand and higher port availability.

Aluminium production was down 5% at 0.8 million tonnes, which the board said was due primarily to disruptions at the Becancour smelter in Canada.

Mined copper production surged 65% to 139.3 thousand tonnes, as output recovered at Escondida following a labour union strike in the first half of last year.

Titanium dioxide slag production dropped 12% from the first quarter of 2017, which was blamed on operational and labour disruptions at Richards Bay Minerals.

As a result, guidance was revised to between 1.1 million and 1.3 million tonnes, from between 1.2 million and 1.4 million tonnes.

Hard coking coal production fell 30% to 1.1 million tonnes, primarily due to the longwall changeover and maintenance works at Kestrel.

Rio Tinto said its major growth projects remained on track, with the Silvergrass iron ore mine continuing to ramp up, Amrun on schedule for first bauxite shipment in the first half of 2019, and construction of the first drawbell at Oyu Tolgoi Underground expected in mid-2020.

Total divestments announced in 2018 totalled $5bn, the board highlighted, subject to completion conditions.

Those included binding offers for the Aluminium Dunkerque smelter in France for $500m and the ISAL aluminium smelter in Iceland for $345m, with those sales expected to complete in the second quarter.

The company also had binding offers for its remaining coal assets, including the Hail Creek and Kestrel mines in Queensland and the Winchester South and Valeria development projects, for total consideration of $4.15bn.

Those sales were expected to complete principally in the second half.

“We delivered a solid operational performance across most commodities in the first quarter of 2018,” said Rio Tinto chief executive Jean-Sebastien Jacques.

“Our world-class Pilbara iron ore assets continue to demonstrate flexibility and the benefits of increased productivity, and production at our bauxite and copper assets was also higher.”

Jacques pointed out that Rio Tinto announced $5bn of divestments in the quarter, highlighting the company’s “ongoing drive” to strengthen its portfolio and increase its return on assets.

“By continuing to advance our mine-to-market productivity programme, whilst maintaining our focus on the disciplined allocation of cash, we will continue to deliver superior returns to our shareholders.”