Rio Tinto Maintains Iron Ore Shipment Guidance as Second Quarter Disappoints

Second-quarter production slips across most categories in the miner's newly created energy and minerals unit, while Australian iron ore output disappoints.
By Laura Board ,

Anglo-Australian mining group Rio Tinto (RIO) - Get Report   on Tuesday said that second-quarter output from its newly created energy and minerals unit declined across most categories, while iron ore production and shipments climbed slightly less than expected.

The company, whose production bulletin comes before updates this week from BHP Billiton (BHP) - Get Report and Anglo American, last month bundled a hotch-potch of underperforming assets, including sub-scale Canadian iron ore operations, into the new unit. Newly arrived CEO Jean-Sebastien Jacques later denied the assets were being prepared for a sale, though some observers expect piecemeal disposals.

In the second quarter within energy and minerals, coking coal output fell in the double digits from a year earlier, though thermal coal edged up by 6%. Production of iron ore pellets from its Canadian operations fell by 2% on the year, and titanium dioxide slag output slumped by 22%. But uranium output from its Energy Resources of Australia and Roessing operations rose by 25% and 29% on the year, respectively.

Rio Tinto said on Tuesday it was on track to meet its full-year iron ore shipment guidance from its core Australian operations of about 330 million tons, up 4% on the year earlier. In the second quarter total iron ore shipments from its main Pilbara operations in Western Australia rose 6% to 82.2 million, slightly weaker than expected, according to JPMorgan Australia, as output rose 8% to 80.9 million.

Rio Tinto and other main producers are benefiting from a roughly 30% upturn in iron ore prices so far this year and are shipping more product to supply Chinese steelmakers.

Rio Tinto on Tuesdasy kept its full-year output targets for most other categories unchanged, through cut its forecast for diamonds and lifted its output expectations for thermal coal.

Rio Tinto shares fell 2.3% in Sydney to A$48.99.

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