Rio copper guidance revised down

KEEPING in the 2017 theme of copper supply issues, Rio Tinto has once again downgraded its full-year copper guidance.
Rio copper guidance revised down Rio copper guidance revised down Rio copper guidance revised down Rio copper guidance revised down Rio copper guidance revised down

Kristie Batten

Lower head grades at Kennecott and Oyu Tolgoi led to a drop in September quarter mined copper production to 120,600 tonnes.

Production for the first nine months of the year was down by 15% to 329,500t.

Rio revised down its 2017 copper guidance to 460,000-480,000t, from 500,000-550,000t due to the delayed ramp-up of the Escondida expansion and mine sequencing changes at Kennecott.

It’s the second copper guidance downgrade for Rio this year after it revised down its forecasts from the original target of 525,000-665,000t in April.

The company also reported a fatality at the Kennecott smelter earlier this month.

Meanwhile, Pilbara iron ore shipments for the quarter were 85.8 million tonnes, 11% higher than the June quarter and 6% up year-on-year due to improved rail capacity.

Year-to-date shipments were 240.2Mt, in line with 2016.

Rio has left full-year guidance unchanged at 330Mt.

Commissioning of the conveyer system at the new Silvergrass mine will begin this month, ahead of ramp-up to full capacity next year.

The company said the implementation of the AutoHaul rail system was progressing to plan, with completion targeted for the end of next year.

In bauxite, the Amrun project is also on track to ship its first product in the first half of 2019.

Quarterly bauxite production was 12.9Mt for a second consecutive quarter, due to strong performances at Gove and Weipa.

Bauxite guidance for 2017 was lifted to 50-51Mt from 48-50Mt.

Rio narrowed its full-year diamond guidance to 19-22 million carats from 19-24Mcts.

Titanium slag production jumped 23% year-on-year due to higher market demand.

Rio CEO J-S Jacques was pleased with the quarter.

“The business performed very well in the September quarter, with a strong quarterly production performance and a wave of productivity improvements embedded through our operations,” he said.

“In particular, we are making good progress with further improvements to our world-class Pilbara iron ore business, including the opening of the Silvergrass mine and the implementation of AutoHaul.”

Rio also boosted returns during the quarter, announcing a new US$2.5 billion buy-back using the proceeds from the Coal & Allied sale.

“We have announced over $8 billion of cash returns in 2017,” Jacques said.

“Our relentless focus on cash generation and disciplined capital allocation will continue to deliver superior returns for our shareholders.”

Pre-tax and pre-divestment exploration for the first nine months of the year fell to $297 million from $379 million.

The company is active in 15 countries across eight commodities, with a focus on copper targets.

Rio shares rose by A26c to $70.81 this morning.