Rio Tinto endures mixed share price reaction after steady trading update
Rio Tinto posted a steady trading update this morning, with output across its mining operations in line with expectations — with markets still rocked by fears of a global recession and dampening demand.
The Aussie commodities giant revealed a 1.2 per cent hike in iron ore shipments over the third quarter, offloading 83.9mt of iron ore from Pilbara, Western Australia, compared with 82.9mt a year earlier.
It recorded only a per cent drop in production from its iron ore operations worldwide, with overall shipments and production for iron ore are up four and five per cent respectively over the first nine months of trading this year.
This is despite a downgrade in expectations from its Canadian iron ore business (IOC), where full-year output projections have been slashed from previous projections of 10mt to 9.3m to 9.8mt.
“Operations at IOC were impacted by extended plant downtime and conveyor belt failures, while we also recovered from wildfires which took place in Northern Quebec in the prior quarter,” the company said in a statement.
Rio is the world’s largest iron ore miner, and generates 70 per cent of its profits from the business.
Its chief market is China, with the company seeing prices for the commodity improve with the country showing signs of economic revival amid government stimulus effort – which should raise demand expectations.
The company maintained its full-year expectations for Pilbara shipments in the upper half of the 320m to 335m tonnes range.
Rio also revealed future facing green assets such as copper and aluminium have seen a sharp rise in output.
Copper production rose five per cent in mined copper output to 169,000 tonnes, and a nine per cent in its quarterly aluminium output to 828,000mt.
This reflected a ramp-up of high-grade underground Oyu Tolgoi mine in Mongolia and rebounding production at its site in Escondida, Chile.
“We are making strong progress towards building the Rio Tinto of the future, striking a balance between disciplined performance in evolving market conditions, investing to generate valuable long-term growth and delivering attractive shareholder returns,” chief executive Jakob Stausholm said.
There has been a mixed reaction to the results from shareholders, with Rio Tinto down 1.3 per cent on the London Stock Exchange in early morning trading, but closing up 1.2 per cent on the Australian Securities Exchange.
Rio has seen its share price nosedive on the FTSE 100 over the past eight months, falling from 6,277p per share in mid-February to a low of 4,559p per share in August – a 27 per cent plummet.
This follows Rio unveiling its lowest first-half year profits since the pandemic in August, plagued by tumbling iron ore prices earlier this year.
It posted profits of £4.4bn for the first six months of trading this year, falling more than a third from the £6.7bn bumper figure posted 12 months prior.
The company has been pinning hopes on approval to mine the world’s largest untapped supply of high-grade iron ore to boost investor sentiment.
These dreams inched closer this summer – after signing deals to build nearly 400 miles of railway infrastructure.
If greenlit, the site could produce 2.3bn tonnes of high-grade iron ore across its two vast deposits.
Rio halted work last month after the company damaged another indigenous rock shelter in Western Australia — just three years after a mass boardroom exodus following the destruction of the Juukan Gorge caves.