Rio Tinto Group (RIO), the world’s second-largest mining company, reported record third-quarter iron ore and power station coal output and raised its full-year copper forecast as China’s commodities’ demand surged.
Iron ore production was 53.4 million metric tons in the three months to Sept. 30, compared with 52.6 million tons a year earlier, the London-based company said today in a statement. That compares with the 53.3 million ton median estimate of five analysts surveyed by Bloomberg.
Economic growth in China, Rio’s biggest customer, is showing signs of rebound after a two-quarter slowdown. Australia, the largest iron ore exporter, this month raised its price estimates on buying from steel mills in China, while the Asian nation’s copper imports rose to an 18-month high.
“The highlights for us are obviously the growth in iron ore shipments and production,” Peter Esho, chief market analyst at Invast Securities Co., said in an e-mail. “Copper is also the big standout.”
Rio, seeking to cut $5 billion in costs by the end of next year, rose 2.5 percent to A$63.20 in Sydney trading. BHP Billiton Ltd., the world’s biggest miner, gained 1 percent.
“In iron ore, we achieved record production and shipments in Western Australia,” Chief Executive Officer Sam Walsh said in the statement. “We are also making further important gains in productivity across our operations and continue to drive costs out of the business.”
Iron ore, Rio’s biggest-earning unit with 91 percent of income last year, entered a bull market in July as users in China replenished stockpiles that shrank in March to the lowest level since 2009. Prices gained 12 percent in the three months to Sept. 30 to trade at an average price of $132.55 a ton. That compares with $112 a ton for the same period last year.
Rio’s iron ore expansion to 360 million tons, from 290 million tons, in Australia’s Pilbara region is underway, with the company evaluating a number of options for the estimated $5 billion project.
Quarterly copper production beat analyst expectations and the company boosted its 2013 mined copper output forecast 4.4 percent from a July estimate to 590,000 tons.
Rio (RIO) produced 162,300 tons of mined copper in the quarter, up 23 percent on a year earlier, beating the 139,000 ton median estimate of five analysts surveyed by Bloomberg. Refined copper output fell 2 percent to 68,300 tons, while Rio boosted its 2013 refined copper output forecast 17 percent to 270,000 tons.
A recovery of open pit operations at Kennecott Utah Copper in the U.S. after a pit wall slide in April continues to progress better than originally planned, Rio said. Mined copper output at Kennecott is expected to be 185,000 tons this year.
Mongolia and Rio are making progress in resolving project financing and other disputes that have stalled an expansion of the $6.6 billion Oyu Tolgoi copper mine in the Asian nation, Ganzorig Temuulen, a Mongolian board member of the venture said Oct. 2. Rio Tinto in July delayed work on a $5.1 billion underground expansion pending financing agreements. Mongolia controls 34 percent of the project.
“We achieved strong production results in the third quarter, with copper volumes up as Oyu Tolgoi ramps up to full capacity and Kennecott continues to recover ahead of expectations,” Walsh said.
Oyu Tolgoi’s customers are making “good progress” with Chinese customs officials to obtain necessary approvals to allow collection of purchased concentrate from a bonded warehouse at the Chinese-Mongolia border, Rio said. Customers have been unable to collect the concentrate while they finalize documentation with Chinese customs.
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