Rio Tinto continues to expand iron ore glut

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Australia’s iron ore glut has continued with Rio Tinto pumping out more of the steelmaking ingredient in the second quarter of 2016 even as prices start to pull back.

Rio’s iron ore production from its mines in Western Australia’s Pilbara rose 8 per cent to nearly 81 million tonnes in the quarter from the same time a year ago.

Quarterly shipments of iron ore from the Pilbara rose 6 per cent to 82.2 million tonnes.

Over the half year, shipments of iron ore increased 8 per cent to nearly 159 million tonnes, while production rose 10 per cent to almost 161 million tonnes.

Rio Tinto said it will produce nearly 330 million tonnes of iron ore this year, in line with production forecasts.

The miner cut into its stockpiles as sales exceeded production in the quarter.

Iron ore prices have surged this year, bouncing back from multi-year lows – because of strong demand from China and rising steel exports.

Overnight, the benchmark price of iron ore at the Tsingdao port in China was down $1.56 to $US56.86 a tonne.

Steelmaking coal production slumps

While iron ore has had a good run this year, coal prices continue to languish at multi-year lows.

Rio Tinto’s coking coal production fell 14 per cent over the quarter from the same period last year.

Thermal coal output, which is used for electricity, rose 2 per cent in the quarter.

Copper production rose 5 per cent in the second quarter because of strong performances at Rio’s Kennecott mine in the US and the Oyu Tolgoi mine in Mongolia.

That offset a weaker performance at Rio and BHP Billiton’s Escondida mine in Chile.

Aluminium production increased 11 per cent over the quarter, and 10 per cent over the first half of 2016, compared to the same time a year ago.

Rio Tinto chief executive Jean-Sebastien Jacques said it was a robust quarter for the big miner.

“We continue to focus on value and maximising cash flow from our assets, through both commercial and operational excellence while maintaining capital discipline,” he said.

“This will ensure that Rio Tinto is well-positioned to generate compelling and consistent returns for our shareholders.”

Source: ABC

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