Rio Tinto 2Q Iron-Ore Shipments Lift, Capex View Revised

Cornelia Mascio
Luglio 18, 2020

Two FTSE 100-listed groups are scheduled to report on trading on Friday, while traders flagged the key macro event as being an important European Union summit at which leaders will start to hammer out the crucial budget to lead the bloc out of the coronavirus (COVID-19) crisis.

Chief executive Jean-Sebastien Jacques said: "We delivered a strong performance, particularly in iron ore and bauxite, demonstrating the underlying resilience of our business and ability to adapt in hard conditions".

Rio Tinto has reported a 1.5 per cent rise in iron ore shipments for the second quarter and says demand for the steelmaking ingredient is improving in China as its economy recovers from the coronavirus outbreak.

"We delivered a strong performance, particularly in iron-ore and bauxite, demonstrating the underlying resilience of our business and ability to adapt in hard conditions", said CEO Jean-Sebastian Jacques.

He said all the company's mines continued to operate through the pandemic, with "rigorous" coronavirus health and hygiene controls now embedded across its operations, including "fit for objective COVID-19 screening".

Half-year shipments were 3% higher than a year earlier at 159.6 million tons and were achieved despite damage to infrastructure such as access roads, accommodation and power lines caused by Tropical Cyclone Damien in February.

Rio's Bauxite production climbs 9% but aluminium production drops by 2% in Q2.

Dropping annually, however, was second-quarter titanium dioxide slag production, by 13% to 262,000.

Bauxite production at 14.6 million tonnes, was up 9 per cent from previous year while aluminium output stood at 785,000 tonnes, down 2 per cent from 2019.

The producer is holding talks with energy providers "to ensure the sustainability of our smelters in Australia and Iceland", and continuing to review options including the closure of the ISAL operation, Rio said. However, some restrictions remain in place or are being reintroduced. "As a result, there continues to be an impact on projects in general although to a lesser degree than earlier in the year", Rio Tinto said.

It added that capital expenditure for 2020 will be around USD6 billion, due to a weaker United States dollar and a "reduced impact of Covid-19 on both sustaining and development expenditure".

It had previously forecast annual capex between USD5 billion and USD6 billion. 2021 and 2022 CAPEX is expected to come in at around $7 billion per share.

"Production guidance remains unchanged across all commodities", the miner added.

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