Rio Tinto soars even as Yarwun palnt prepares for annual shutdown

Rio Tinto has announced a 21% hike in earnings to 5.1 billion while its Yarwun alumina site in Gladstone prepares for its annual shutdown.

Yarwun and Qal, which had both been affected in 2013 by the ex-tropical cyclone named Oswald, are doing much better with the first half results showing a 9% gain in alumina production.

The challenges of refinery design and construction are constantly being addressed and the Yarwun production capacity is expected to reach its full capacity by the second half of 2015.

Although the first half 2014 production is consistent with the production over the same period last year, the group’s this year’s underlying earnings for the first half was calculated at $373 million, 74% more than last year.

The major difference in the earnings was caused by the greater drive of the company to cut costs teamed with the weaker Australian and Canadian dollar along with higher product premiums and a stronger aluminium market. Since the group’s 61% metal sales are in the value added product line, they naturally earn a superior price.

Two opposite forces were working in sync, with the LME prices declining by 9% lowering earnings by $ 265 million, at the same time cash cost improvements hiking the earnings by $162 million.

The greater production efficiency and lower functional costs and costs of raw materials, along with the higher production obtained from Queensland Alumina, Yarwun, AP60 and Alma, lowered unit cash production cost boosting the group’s savings.