Rio Tinto’s Australian operations recover from floods

Diversified mining group Rio Tinto’s Australian operations have largely recovered from the floods, which hampered production earlier this year, with the miner on Thursday reporting higher second-quarter iron-ore and coal output.

“Operations largely recovered from the severe weather impacts earlier this year, although some port and rail constraints remained,” said CEO Tom Albanese.

He noted that the quarter ended June 30 was also characterised by continued strong prices for most of the company’s metals and minerals, but with worsening adverse exchange rates and some input cost pressures.

Rio’s global iron-ore production increased to 49-million tons during the quarter, up 12% from the previous comparable quarter, and 17% from the first quarter of the year.

The Pilbara mines recovered strongly from the first-quarter production and produced 59-million tons, only 3% lower than the record production levels achieved in the fourth quarter of 2010.

Albanese said that this was despite the unseasonably wet weather throughout the second quarter.

The company’s Pilbara capacity increased by five-million tons to 225-milion tons a year at the end of the first quarter, following the completion of the first debottlenecking project at the Dampier port. The expansion of the Pilbara capacity to 283-million tons a year, by the second half of 2013, remains on track.

Second-quarter saleable iron-ore production at the Iron Ore Company of Canada decreased by 14% compared with the same quarter last year, as a result of truck and labour availability issues. However, production was 31% higher than the first quarter as progress was made to stabilise and improve production capability.

The Canadian operation produced some 1.95-million tons of pellets and concentrate during the quarter under review.

Hard coking coal production also recovered from severe flooding during the first quarter, said Albanese, but at 1.78-million tons, it was 26% lower than the second-quarter production of 2010.

Production at the Hail Creek operation in Australia improved by 71% on the first quarter, following the lifting of a force majeure on May 12.

The Kestrel operation’s production was 59% lower, owing to a planned one-month longwall changeover during the quarter.

Semi-soft coking coal output fell to 689 000 t, from 691 000 t in the first quarter and one-million tons in the second-quarter last year, which Rio attributed to a product mix at the Hunter Valley operations, where thermal coal production was 64% higher.

Thermal coal production increased by 5% year-on-year and 18% quarter-on-quarter to 4.76-million tons. Rio told shareholders that both the Clermont and Hunter Valley operations recovered rapidly from the difficult conditions of the first quarter, with the Hunter Valley operations setting a monthly record for overburden removal during the second quarter.

METALS

Meanwhile, Rio reported that mined copper at 127.2-million tons was 24% lower than the second quarter of 2010, primarily reflecting lower grades at the Escondida operations, in Chile, and the Kennecott Utah copper operations. Refined copper production dipped to 89.9-million tons, from 90.6-million tons a year earlier.

The Escondida operation produced some 55 100 t of mined copper and 22 200 t of refined copper during the quarter under review. This was a 31% decrease on the previous corresponding quarter’s production, and Rio said this was driven by the copper grade decreasing from 1.4% to 1.06%.

At the Kennecott Utah operations, mined copper production declined by 17% compared with the second quarter in 2010, to 45 600 t, while refined copper production reached 57 700 t.

Molybdenum in concentrate production was 53% higher at 4 300 t, owing to higher grades and recoveries.

Rio said that copper, gold and silver production for the remainder of 2011 was expected to remain lower when compared with the 2010 levels, as mining progressed through lower-grade areas of the openpit operation at Kennecott.

Aluminium production for the quarter under review remained more or less on par with the 2010 figures, with Rio producing some 958 00 t of the metal. Bauxite production was 11% higher at 8.7-million tons, while alumina production was stable at 2.2-million tons.

Rio said that alumina production was gradually recovering from abnormally heavy rains between December and April, which primarily impacted the alumina production in Queensland, affecting bauxite and coal quality, equipment reliability and freight costs.

The impact of the wet weather was expected to lower Rio Alcan's underlying earnings by around $130-million during the first half of this year, compared with the first half of 2010, owing to lost alumina tonnage and higher costs in mining, refining and power generation, with a smaller impact continuing into the second half of 2011.