Australian iron ore giant Rio Tinto has announced its financial results for 2013, posting a net profit of US$3.67 billion in the given period, compared to the net loss of US$3.03 billion in 2012. The company's net debt decreased by $1.1 billion year on year to $18.1 billion as of December 31, 2013, as operating cash inflows and divestment proceeds fully offset the outflows relating to capital expenditure and the increase in the dividend.
Rio Tinto's net profit from its iron ore unit in 2013 amounted to US$9.85 billion, up 6.6 percent year on year, attributable to record sales volumes in the Pilbara region in Western Australia, a weaker Australian dollar, marginally higher prices and cost savings initiatives which enhanced earnings by US$240 million. Rio Tinto's underlying earnings before interest, taxes, depreciation and amortization (EBITDA) for its iron ore unit were 11.2 percent higher year on year at US$17.44 billion in the given year.
In 2013, iron ore sales of 259 million mt set a new record and were five percent higher than the previous year, partly driven by the completion of the first phase of the capacity expansion to 290 million mt per year. Sales were lower than production due to interruptions in shipping caused by a conveyor belt breakage, significant flooding in Pilbara following unseasonal weather in the second quarter of 2013 and tropical cyclone activity that closed ports during January and December, the latter impacting the first weeks of January 2014. In 2013, Rio Tinto's Pilbara mines produced 251 million mt of iron ore, also reaching a record.
According to Rio Tinto's statement, in 2014 Rio Tinto expects to produce approximately 295 million mt from its global operations in Australia and Canada, subject to weather constraints. The ramp-up of production in the Pilbara to nameplate capacity of 290 million mt per year is scheduled to be completed before the end of the first half of 2014. There were approximately 14 million mt of iron ore inventories at the Pilbara mines on December 31, 2013, in excess of normal inventory levels. These have been built up over the past four years and will now be progressively drawn down over the next three years.