Rio Tinto Reports Record Iron Ore Output on Expansions
January 22, 2012, 5:47 PM ESTBy Soraya Permatasari and Elisabeth Behrmann
(Updates to add analyst comments in fourth paragraph.)
Jan. 17 (Bloomberg) -- Rio Tinto Group, the third-largest mining company, said fourth-quarter iron ore production rose to a record, driven by expansions at its mines and ports in Australia’s Pilbara region.
Output was 51.2 million metric tons in the three months ended Dec. 31, from 50.1 million tons a year earlier, London- based Rio said today in a statement. This compares with a 52 million ton estimate from RBC Capital Markets and 49.6 million tons from Credit Suisse Group AG.
Fortescue Metals Group Ltd., Australia’s third-biggest iron ore producer, today reported a 45 percent jump in shipments and forecast a rebound in demand in from steel mills in China. Asian shares rose as China’s slowest economic growth in more than two years bolstered expectations for an easing in monetary policy.
“Iron ore production was slightly ahead of forecast,” Lyndon Fagan, a Sydney-based resources analyst for Royal Bank of Scotland Plc, said by phone. “RBS remains positive on China’s GDP growth.”
Rio gained 1.3 percent to A$65.70 at the close of Sydney trading today, its highest in more than a month.
In December, China’s steel output gained 0.7 percent to 52.16 million tons from a year ago, the National Bureau of Statistics said today. That’s up 4.6 percent from November, according to data compiled by Bloomberg. A projected steel output rebound in China will be positive for iron ore and coal, Credit Suisse said in a report this month.
Pilbara Expansion
The expansion of output in the Pilbara to 283 million tons a year by the end of 2013 remains on track, the company said. That is expected to rise to 353 million tons by the end of the first half 2015, it said. Total capital spending across the company this year is likely to rise above the current target of $15 billion, Rio said.
“This was another record-breaking year in the Pilbara with both quarterly and full-year iron ore production and shipments beating previous achievements, as our expansion program continues apace,” Chief Executive Officer Tom Albanese said in the statement. “Across the group, production has bounced back from the severe weather conditions experienced in the first half.”
Production of mined copper in the quarter fell 26 percent to 137,000 tons because of lower grades and strikes at the Grasberg mine in Indonesia, Rio said. Aluminum, the company’s third-biggest earner in 2010, was unchanged at 961,000 tons, while coking coal output rose 16 percent to 2.64 million tons.
Sales of iron ore and coal will account for about 90 percent of Rio’s earnings for 2011, Credit Suisse analyst Paul McTaggart said in a Jan. 16 note. Miners may see lower profit in 2012 as world economic growth slows, said Deutsche Bank AG.
“It is fair to say that global growth has been lower than we expected 6 months ago,” Deutsche Bank analysts Rob Clifford, Grant Sporre and Gaetan De Buyer said in a Jan. 9 report. “We now see 2012 as a year of declining earnings for the miners.”
--With assistance from Jesse Riseborough. Editors: Keith Gosman, Rebecca Keenan
To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Soraya Permatasari in Melbourne at soraya@bloomberg.net
To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net; Rebecca Keenan at rkeenan5@bloomberg.net
