Rio Tinto Group said second-quarter iron-ore production increased 11 percent after the world’s second-largest mining company expanded operations in the remote Pilbara region of Western Australia.
Output was 57.5 million metric tons in the three months to June 30, compared with 51.8 million tons a year earlier, London-based Rio said today in a statement. That’s in line with the 57.7 million-ton median estimate of seven analysts surveyed by Bloomberg. The company raised its full-year copper forecast.
The price of iron ore has dropped 27 percent this year as producers including Rio and BHP Billiton Ltd. expand mines, ports and railways to meet Chinese demand. Rio reported net income of $9.9 billion from its iron-ore division last year, representing 88 percent of companywide profit.
“What you have got to ask is whether the increased shipments and increased output is going to keep the depressed prices that we currently see in iron ore,” said Evan Lucas, a Melbourne-based market strategist at IG Ltd. “Copper is bouncing back and copper prices are back at levels the company would want, so that’s where you might see the offset to the fall in the iron-ore price.”
Rio increased its projection for full-year copper production to 585,000 tons from 570,000 tons as output rose at its Oyu Tolgoi mine in Mongolia and at Kennecott Utah Copper in the U.S. Copper-mine output rose to 164,800 tons in the quarter from 129,200 tons a year earlier, Rio said in the statement.
Copper was little changed at $7,129.75 a ton ($3.23 a pound) on the London Metal Exchange at 9:54 a.m local time. It gained 5.6 percent in the second quarter.
Rio rose 2 percent to 3,310 pence by 10:08 a.m. in London. It advanced 1.3 percent to A$63.94 by the close in Sydney where it’s dropped 6.2 percent this year. Rio reports first-half financial results on Aug. 7.
“Our iron-ore expansion continues to deliver high-margin growth reinforcing our position as a low-cost producer,” Chief Executive Officer Sam Walsh said in today’s statement.
Port infrastructure upgrades needed to support Rio’s plans to expand total iron-ore output to an annual rate of 360 million tons are expected to be completed in the first half of 2015, the producer said.
Iron ore with 62 percent iron content delivered to Tianjin rose 0.1 percent to $98 a dry ton yesterday, according to data from The Steel Index Ltd. It lost 20 percent in the second quarter and dropped to the lowest since 2012.