Rio Tinto’s iron ore output up eight percent in Q2

Wednesday, 15 July 2009 13:56:28 (GMT+3)   |  
       

On Wednesday, July 15, Australian mining giant Rio Tinto released its operations review for second quarter of 2009.
 
As per review, Rio Tinto's global iron ore production was up by eight percent in the second quarter of 2009 compared with the second quarter of 2008 and the company expects the recovery in steel demand in China to continue in this half year.

Accordingly, Rio Tinto's iron ore production, the biggest contributor to earnings, was 45.2 million mt in the three months to June 30, from 41.9 million mt a year earlier. In the first quarter of 2009, Rio Tinto's global production of iron ore was down by 15 percent to 37.4 million mt compared to the year-ago period.

Moreover, Rio Tinto's iron ore guidance for its global operations in 2009, incorporating Australia, Canada and Brazil, remains around 200 million mt (on a 100 percent basis) with the recovery in Chinese steel demand expected to continue into the second half of 2009.

In the period in question, the company's Pilbara operations registered 42 million mt of iron ore production up by 11 percent compared with the second quarter of 2008 operating at close to full capacity. The company's total shipments from the Pilbara region during the second quarter totaled 52.5 million mt, 33 percent higher than the previous quarter, and a 14 percent increase on the same quarter of 2008.

Meanwhile, production has been suspended at the company's Canadian operations Iron Ore Company of Canada from three pellet lines, as demand slumped in the wake of the global financial crisis. A five-week summer shutdown in Canada commenced on July 7.

On the other hand, the HIsmelt pig iron plant in Western Australia has been placed on a care and maintenance program up to April 2010, due to depressed global pig iron prices and poor market outlook.

During the second quarter, Rio Tinto settled 2009 iron ore supply contracts with Japanese, South Korean and Taiwanese steelmakers. Deliveries continue to other customers on a provisional price or spot sales basis. Approximately half of the iron ore that Rio Tinto has produced in this calendar year has been sold on a spot market basis. The delivered iron ore spot price has risen in line with rising freight rates, while on an FOB basis spot prices have remained relatively flat during the quarter.

On June 5, 2009, Rio Tinto announced that it had entered a non-binding agreement with its Australian rival BHP Billiton to establish a production joint venture of both companies' Western Australian iron ore assets, a move which has been criticized by the global steel industry for being monopolistic.

Following the failure of the proposed US$19.5 billion deal with China's Aluminum Corp. of China (Chinalco), on July 3, Rio Tinto successfully completed its $15.2 billion rights issue with valid acceptances of 96.97 percent for Rio Tinto plc and 94.76 percent for Rio Tinto Limited. The proceeds will be used to partially pay off the $39 billion debt of the group.


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