Rio Tinto released its Q4 results, stating that despite some operational challenges in 2019, it ended the quarter with good momentum.
Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) released its fourth quarter production results, stating that while it has experienced some operational challenges in 2019, it ended the quarter with good momentum.
Highlights are as follows:
- Pilbara iron ore shipments of 327 million tonnes (100 percent basis) were 3 percent lower than 2018, primarily impacted by weather and operational challenges in the first half of 2019 and our active decision to protect the quality of the Pilbara Blend. In addition to direct sales from Australia, we commenced trials of portside trading in October 2019.
- On 27 November 2019, it announced a AU$749 million investment in the Greater Tom Price operations (Western Turner Syncline Phase 2) in the Pilbara region of Western Australia, to sustain production capacity.
- Bauxite production of 55 million tonnes was 9 percent higher than 2018, underpinned by the successful ramp-up of the Amrun mine in Queensland, Australia. Third party shipments of 40 million tonnes were 21 percent higher than 2018.
- Aluminium production of 3.2 million tonnes was 2 percent lower than 2018, primarily reflecting a preventive safety shutdown of one of the three pot-lines at ISAL in Iceland and earlier than planned pot relining at Kitimat in British Columbia, Canada in the second half.
- On 23 October 2019, the comapny announced a strategic review of our interest in the Tiwai Point aluminium smelter in New Zealand, to be completed in the first quarter of 2020.
- On 3 December 2019, Rio announced the approval of a AU$1.5 billion investment at Kennecott in the US, phase two of the south wall pushback project, extending operations to 2032.
- Mined copper production of 577 thousand tonnes was 5 percent lower than 2018, reflecting lower copper grades, partially offset by higher throughput. Lower copper grades at Kennecott impacted the fourth quarter in particular: this is expected to persist until the company accesses higher grades from the end of 2020, resulting from phase one of the south wall pushback project.
- Following the signing of renewable power agreements in Chile, Escondida has raised a provision related to the cancellation of existing coal contracts. Rio has recognised a charge of approximately AU$200 million against 2019 underlying EBITDA.
- At the Oyu Tolgoi underground project in Mongolia, Rio completed the primary production shaft (shaft 2) in October. Work continued on the mine design and, overall the company remains within the cost and schedule ranges as announced in July 2019. Rio continues to expect to complete the mine design in the first half of 2020 and the definitive estimate of cost and schedule in the second half of 2020.
- Titanium dioxide slag production of 1.2 million tonnes was 8 percent higher than 2018, reflecting continued operational improvement and the restart of furnaces in line with market conditions. Fourth quarter production was impacted by the curtailment of operations at Richards Bay Minerals (RBM) in South Africa, following an escalation in violence in the surrounding communities. A phased restart commenced at the end of December.
- Production of pellets and concentrate at the Iron Ore Company of Canada (IOC) was 18 percent higher than 2018, when strike action occurred. Fourth quarter production was 10 percent lower than the same quarter of 2018 due to unplanned equipment-related downtime.
- On 18 November 2019, Rio announced that we would support Energy Resources of Australia Limited’s (ERA) plans for a renounceable entitlement offer to raise AU$324 million for the rehabilitation of the Ranger project area in Australia’s Northern Territory.
- Exploration and evaluation spend in 2019 was AU$624 million, 28 percent higher than 2018, primarily reflecting increased activity at Resolution Copper in the US and on the Winu and Falcon advanced projects in Australia and Canada. The company achieved a major permitting milestone at Resolution with the release of an independently prepared draft environmental impact statement in August 2019.
- In 2019, the company repurchased approximately AU$1.6 billion of Rio Tinto plc shares (28.4 million) on-market.
J-S Jacques, chief executive, commented:
We finished the year with good momentum, particularly in our Pilbara iron ore operations and in bauxite, despite having experienced some operational challenges in 2019. We are increasing our investment, with AU$2.25 billion of high-return projects in iron ore and copper approved in the fourth quarter. We also boosted our exploration and evaluation expenditure to AU$624 million in 2019, further strengthening our pipeline of opportunities.
We have the platform and performance to maintain our delivery of superior returns to shareholders over the short, medium and long-term, driven by our strong value over volume approach and ongoing disciplined allocation of capital.