Rio Tinto iron ore production hits record level

17th Jan 2012 07:20

Rio Tinto, the Anglo-Australian mining firm, saw fourth quarter production continue to bounce back after output was hit by severe weather conditions in the first half of the year.Fourth quarter iron ore production hit a new quarterly high of 65m tonnes. On an attributable basis, production was 2% higher than the fourth quarter of 2010 at 51m tonnes. Production for 2011 was also a new record at 245m tonnes.The amount of iron ore shipped during 2011 as a whole was below the amount it actually produced, at 239m tonnes. The firm says extreme weather conditions affected shipments in Australia in particular.Fourth quarter sales of 61m tonnes (on a 100% basis) and full year sales of 225m tonnes also set new records despite the impact of inclement weather in the first half of the year. Total alumina production in the fourth quarter rose to 2.36m tonnes from 2.29m tonnes the year before, while aluminium production held more or less steady at 0.96m tonnes. Total bauxite production climbed to 9.47m tonnes from 8.46m tonnes in the final quarter of 2010.The company said second half 2011 underlying earnings for the group's aluminium operations (including Rio Tinto Alcan, Pacific Aluminium and Other) are expected to be slightly worse than break-even due to difficult market conditions and the impact of various one-off costs, including additional closure costs at Lynemouth of some $40m.Mined copper production in the final quarter was 0.14m tonnes, down from 0.19m tonnes a year earlier, while refined copper production fell to 80,900 tonnes from 99,500 tonnes in the fourth quarter of 2010.Hard coking coal production in the final quarter of 2011 was up 16% on the final quarter of 2010, but thermal coal production was down 14% year-on-year, largely due to maintenance work at Clermont, a temporary shutdown to upgrade the plant at Bengalla as part of expansion activities and a four week failure of a dragline at Mount Thorley Warkworth.Pre-tax and pre-divestment expenditure on exploration and evaluation charged to the profit and loss account in 2011 was $1,387m compared with $589m in 2010. Of this 2011 expenditure, around 38% was incurred by the Iron Ore group, 33% by Copper, 7% by Energy, 5% by Rio Tinto Alcan and the balance was incurred by Central Exploration. Total capital expenditure during 2012 is already expected to be $15bn with further project approvals likely to see this figure rise.While Rio's shares in Australia closed slightly lower after the production update, the reaction in London was broadly positive, with the shares up 77.5p to 3,666.5p in the afternoon session in a buoyant mining sector. BS/JH