Higher bauxite sales volume drives Rio Tinto's underlying EBITDA for aluminium business in H1 2018

Rio Tinto has released its H1 2018 financial results on August 1, 2018. The Aluminium group’s underlying EBITDA increased by ten per cent compared with H1 2017, driven significantly by higher bauxite volumes and stronger pricing.

Rio Tinto’s H1 bauxite production of 25.9 million tonnes was up 7% from the 2017 first half production of 24.1 million tonnes, driven by its continued implementation of operational improvements. Gross sales revenues for bauxite in 2018 first half increased 26% to US$1,207 million and included freight revenues of US$178 million compared to US$111 million in H1 2017. This strong operational performance in bauxite segment enabled the group to increase its third party bauxite shipments by 14% to 17.0 million tonnes.

This has further established Rio Tinto’s position as the global leader in the seaborne bauxite trade. The results say there are significant uncertainties around the direction of the bauxite market primarily due to the recent and substantial growth in bauxite mine capacity in Guinea and uncertainties surrounding the supply reforms underway in China.

Rio Tinto’s expected share of bauxite production for the full year 2018 remains unchanged at between 49 and 51 million tonnes of bauxite.

Rio’s US$1.9 billion Amrun bauxite project on the Cape York Peninsula in north Queensland is advancing according to the plan. Most of the construction works are nearing completion including the shiploading facility. The project remains on schedule for first commercial bauxite shipment in H1 2019.

Another $0.7 billion bauxite project to expand the production capacity of the Compagnie des Bauxites de Guinée (CBG) to 18.5 million tonnes per annum also remains on schedule and the first shipment from the expansion project is expected to take place in Q4 2018.

Rio Tinto’s bauxite business and its continuous productivity improvement at minimal cost remains central to the aluminium group’s performance.