Rio Tinto Reports Record Q4 Iron Ore Production, Shipments

(RTTNews) - Anglo-Australian mining giant Rio Tinto Plc (RTNTF, RIO, RIO.L, RTPPF) reported Wednesday a six percent increase in global iron ore production for the fourth quarter, reflecting the expansion of mining operations in the Pilbara region. Shipments also grew 8 percent to a record amid continued demand from Chinese steel manufacturers.

China is the world's largest buyer of iron ore used to make steel, and mining companies such as Rio Tinto are sensitive to demand from China, the second-largest economy in the world.

The company reported record quarterly and annual iron ore production, shipments and rail volumes.

"These are excellent fourth quarter operational results, demonstrating continued delivery on our commitments. We have set new records for iron ore production and shipments as we ramp up our 290 expansion, as well as achieving an impressive recovery in copper volumes and record annual production for both bauxite and thermal coal," Chief Executive Sam Walsh said in a statement.

Rio Tinto, the world's second largest iron-ore producer, said global iron ore production for the fourth quarter increased 6 percent from last year to 70.43 million tons, with Rio Tinto's share also growing 7 percent from last year to 55.51 million tons. Iron ore accounts for roughly two-thirds of the profit of Rio Tinto.

At Pilbara, iron ore production for the quarter grew 7 percent to a new record of 66.48 million tons from last year. Sales also set a new record of 68.82 million tons, up 9 percent from last year. Shipments from the Pilbara exceeded production by two million tons in the quarter. The mines in the Pilbara region are among those having the lowest cost of operations in the world.

Global iron ore shipments for the quarter grew 8 percent to a record 72.41 million tons from the year-ago quarter.

In the quarter, total mined copper production improved 5 percent, primarily benefiting from the ramp up of production at Oyu Tolgoi to full capacity.

Bauxite production for the quarter grew 7 percent, while aluminum production declined 4 percent from last year. However, Rio Tinto's share of aluminum production grew two percent from last year. Rio Tinto Alcan's alumina production edged down 1 percent from a year ago.

In the quarter, hard coking coal's production was up 25 percent, while semi-soft and thermal coal production declined 9 percent from last year.

The company noted that the safe and efficient ramp up to 290 Mt/a nameplate capacity across mines, rail and ports remains on track for completion by the end of the first half of 2014.

The ramp up will see Pilbara mine production capacity increasing by more than 60 million tons between 2014 and 2017, with production of 330 million tons expected in 2015, compared to production of 250.6 million tons in 2013.

For the year 2013, the company noted that global iron ore production increased 5 percent to 266 million tons, with Rio Tinto's share also growing 5 percent. Global iron ore shipments also grew 5 percent to 259 million tons.

The company said it reported record annual production and shipments for bauxite, with production records at both Australian mines and in Guinea.

Rio Tinto revealed that exploration and evaluation expenditure reduced by over $1 billion in 2013 compared with 2012, exceeding the $750 million target set for the year.

The company noted that non-core asset divestments totaling $3.5 billion were announced in 2013, of which $2.5 billion were completed in 2013.

"We have exceeded our cost cutting targets for the year and announced or completed $3.5 billion of non-core asset sales. These actions, together with lower capital expenditure in 2013 and beyond, will ensure that Rio Tinto is well positioned to deliver greater value to shareholders," Walsh added.

In Thursday's regular trading session, RIO.AX is currently trading on the ASX at A$65.52, up $1.28 or 1.99% on a volume of 1.55 million shares.

RIO closed Wednesday's regular trading session at $52.99, up $0.79 or 1.51% on a volume of 2.33 million shares.