Rio Tinto Group, the world’s second-largest mining company, posted better-than-expected fourth-quarter iron ore output and said it’s pressing ahead with expansion of its biggest business.
Rio’s share of iron ore production rose to 52 million metric tons in the three months to Dec. 31 from 51.2 million tons a year earlier, the London-based company said today in a statement. That compares with the median forecast of 50.6 million tons of four analysts surveyed by Bloomberg.
“Markets remain volatile, but our business continues to perform well,” Chief Executive Officer Tom Albanese said in the statement. “Across the group we are taking action to roll back unsustainable cost increases. This further enhances our resilience and competitive edge as we enter 2013.”
Rio, the biggest iron ore exporter after Brazil’s Vale SA, reiterated its aim to boost annual capacity in Australia’s Pilbara region, pressing ahead with the expansion of its most profitable unit at the same time it seeks to cut $5 billion in costs across operations by 2014. A sharp iron ore recovery from near three-year lows in September has offered some respite to producers grappling with rising costs.
Rio was little changed at A$65.90 at the close of trade in Sydney. The company’s shares have gained 1.6 percent in the past year.
Iron ore prices have recovered 78 percent since the September low to reach a 15-month high, and are forecast to average $120 a ton in the first quarter, according to analyst estimates compiled by Bloomberg. An improvement in China’s economy, the biggest metals consumer, has helped commodity prices. A measure of manufacturing activity showing a third month of expansion has added to evidence that China’s recovery is extending into the new year.
Rio’s expansion in the Pilbara to 290 million tons by the end of this year remains on track, with production scheduled to rise to 360 million tons by the first half of 2015, it said.
Mined copper production in the fourth quarter rose 20 percent to 163,900 tons, after higher ore grades at Escondida, the world’s biggest copper mine. Refined copper output was up 7 percent at 86,200 tons compared with a year earlier.
Thermal coal production rose 40 percent in the quarter to 6.2 million tons, while coking coal, used to make steel, fell 27 percent to 1.9 million tons after maintenance shutdowns at two of its mines in Australia.
“In response to lower coal prices, a high Australian dollar and high input costs impacting the coal industry in Australia, Rio Tinto is actively reducing controllable costs in this business,” the company said in the statement.
Rio expects to conclude a review of its Gove bauxite and alumina operations in Australia’s Northern Territory by the end of the month and may decide to halt production should it fail to ensure supply of cheaper natural gas to power the refinery.
The company is pursuing a potential sale of 13 aluminum assets to improve the group’s financial performance. It’s also conducting a review of its diamond business, comprising three mines in Canada, Australia and Zimbabwe.