Press Release by
Rio Tinto chief executive J-S Jacques said "Operational performance was solid across most commodities, rounding out a strong first half performance for the Group. Our increasingly flexible Pilbara iron ore system continued to perform well. Our bauxite and copper businesses also delivered strong operating results, demonstrating the success of our ongoing mine-to-market productivity programme, which is increasingly important in an environment of rising cost inflation. Our sustained focus on cash generation, combined with disciplined capital allocation, will ensure we continue to deliver superior returns to our shareholders across the short, medium and long term."
- Pilbara iron ore shipments of 88.5 million tonnes (100 per cent basis) in the second quarter were 14 per cent higher than the second quarter of 2017, benefiting from better weather and reflecting improved productivity across the system. Shipments in 2018 are expected to be at the upper end of the existing guidance range of 330 to 340 million tonnes (100 per cent basis).
- Bauxite production of 13.3 million tonnes was three per cent higher than the corresponding quarter of 2017, due to continued operational improvements. Third party shipments increased by ten per cent to 8.7 million tonnes due to firm demand.
- Aluminium production of 0.9 million tonnes was three per cent lower than the second quarter of 2017 due primarily to labour disruptions at the non-managed Becancour smelter in Canada and a power interruption at the Dunkerque smelter in France.
- Mined copper production of 156.8 thousand tonnes was 26 per cent higher than the corresponding quarter of 2017, reflecting strong production at Escondida following a labour union strike in the first half of last year.
- Hard coking coal production was 40 per cent higher than the corresponding quarter of 2017 due primarily to the impact of Cyclone Debbie last year.
- Titanium dioxide slag production was 27 per cent lower than the second quarter of 2017. Production was suspended at Rio Tinto Fer et Titane in Sorel-Tracy following a fatality on 26 April 2018. Production at Richards Bay Minerals has been impacted by ongoing labour disputes between contractors and their employees.
- Production at Iron Ore Company of Canada was significantly impacted in the second quarter, where operations were suspended while a new labour agreement was reached. Operations returned to normal production rates by the end of June 2018.
- Cost inflation is being experienced, particularly in the Aluminium group with higher raw material costs. Disruptions during the first half have also impacted unit costs at IOC and RBM.
- The major growth projects remain on track, with first bauxite shipment from Amrun expected in the first half of 2019 and construction of the first drawbell at Oyu Tolgoi Underground anticipated in mid-2020.
- The AutoHaulTM project achieved two major milestones, with regulatory approval on 18 May 2018 and the first loaded autonomous train journey from mine to port completed on 10 July 2018.
- Divestments announced in the first half of 2018 totalling $5.0 billion pre-tax, subject to completion conditions, are all expected to complete by the end of 2018, including the Dunkerque and ISAL smelter sales and the Group's coking coal assets.
- On 12 July 2018, Rio Tinto announced that it had signed a non-binding Heads of Agreement with PT Indonesia Asahan Aluminium (Persero) (Inalum), and Freeport-McMoRan Inc. detailing the proposed principal terms for the sale of its entire interest in Grasberg to Inalum for $3.5 billion. Given the terms that remain to be agreed, there is no certainty the transaction will complete and any final agreements will be subject to regulatory approvals.
All figures in this report are unaudited. All currency figures in this report are US dollars, and comments refer to Rio Tinto's share of production, unless otherwise stated. To allow production numbers to be compared on a like-for-like basis, production from asset divestments completed in 2017 is excluded from Rio Tinto share of production data but assets sold in 2018 remain in comparisons.
Full report here.