News Column

Rio Tinto announces record production for iron ore, bauxite and thermal coal in 2013

January 21, 2014

ENP Newswire - 21 January 2014 Release date- 17012014 - Rio Tinto chief executive Sam Walsh said 'These are excellent fourth quarter operational results, demonstrating continued delivery on our commitments. We have set new records for iron ore production and shipments as we ramp up our 290 expansion, as well as achieving an impressive recovery in copper volumes and record annual production for both bauxite and thermal coal. We have exceeded our cost cutting targets for the year and announced or completed $3.5 billion of non-core asset sales. These actions, together with lower capital expenditure in 2013 and beyond, will ensure that Rio Tinto is well positioned to deliver greater value to shareholders.' Highlights Record quarterly and annual iron ore production, shipments and rail volumes. Shipments from the Pilbara exceeded production by two million tonnes in the fourth quarter, despite impacts from cyclone Christine, which closed the ports for three days at the end of the year and affected the progressive recovery of rail and ports into January. The safe and efficient ramp up to 290 Mt/a nameplate capacity across mines, rail and ports remains on track for completion by the end of the first half of 2014. Mined copper benefited from the ramp up of production at Oyu Tolgoi to full capacity and continued improvement in grades and throughput at Kennecott Utah Copper. The heavy equipment access road at Kennecott was completed in October giving renewed access to the entire open pit earlier than originally scheduled. Record annual production and shipments for bauxite, with production records at both Australian mines and in Guinea . Production of semi-soft and thermal coal improved significantly for the full year due to productivity improvement initiatives and the completion of brownfield mine developments. Over $2 billion of operating cash cost improvements achieved in 2013 compared with 2012. Exploration and evaluation expenditure reduced by over $1 billion in 2013 compared with 2012, exceeding the $750 million target set for the year. Non-core asset divestments totalling $3.5 billion announced in 2013, of which $2.5 billion completed in 2013. On 8 January 2014 , Turquoise Hill Resources announced the successful completion of its approximately $2.4 billion rights offering which was fully subscribed. The proceeds of the rights issue will be used to repay loans outstanding to Rio Tinto , and will result in a $1.2 billion reduction in Rio Tinto's consolidated net debt. IRON ORE Rio Tinto share of production (million tonnes) Global iron ore production for the full year of 266 million tonnes ( Rio Tinto share 209 million tonnes) set a new annual record, five per cent higher than in 2012. Fourth quarter global production of 70 million tonnes ( Rio Tinto share 56 million tonnes) was six per cent higher than the same period in 2012. Pilbara operations Fourth quarter production of 66.5 million tonnes ( Rio Tinto share 53.2 million tonnes) set a new quarterly record, driven by productivity improvements and continued ramp up of recent mine expansions. Production for 2013 was 250.6 million tonnes ( Rio Tinto share 199.9 million tonnes), five per cent higher than in 2012. In the last three days of December, Rio Tinto's Pilbara ports and coastal rail operations were closed due to the adverse weather conditions caused by tropical cyclone Christine. Rail and port operations continued to be impacted into January but full operations have now resumed. Pilbara marketing Fourth quarter sales set a new record of 68.8 million tonnes (100 per cent basis) as the expanded Cape Lambert port is progressively commissioned and ramped up. Shipments exceeded production by 2.3 million tonnes and were nine per cent higher than in the same quarter of 2012. 2013 sales of 244.3 million tonnes (100 per cent basis) were five per cent higher than last year. Slightly more than half of sales were priced on a current month index average price. Approximately 30 per cent were sold with reference to the quarter's average, lagged by one month. The remainder was sold either on a current quarter average or on the spot market. Prices are adjusted for product characteristics and iron and moisture content. Pilbara expansion Following completion of infrastructure works associated with the 290 Mt/a project, four months ahead of schedule and $400 million under budget, ramp up of shipments to nameplate capacity of 290 Mt/a continued in the fourth quarter of 2013. This is scheduled to be complete by the end of the first half of 2014. Expansion of the port, rail and power infrastructure to 360 Mt/a is currently underway and is due for completion by the end of the first half of 2015. On 28 November 2013 , Rio Tinto set out its breakthrough pathway to optimise the growth of mine capacity towards 360 Mt/a at a capital intensity in the mid-$120s per tonne, significantly lower than originally planned. A series of low-cost brownfield expansions will bring on additional tonnes, with production of 330 million tonnes expected in 2015. Mine production capacity will increase by more than 60 million tonnes between 2014 and 2017. Iron Ore Company of Canada (IOC) Saleable production for 2013 was nine per cent higher than in 2012 due to continued improvement in the expanded mine and concentrator. Completion of the second phase of the Concentrate Expansion Project to bring total concentrate production capacity to 23.3 Mt/a is expected during the first half of 2014. 2013 concentrate sales were 46 per cent higher than in 2012. This is as a result of the additional concentrate volumes from recent expansions and the decision to curtail pellet production to reduce costs. COPPER Rio Tinto share of production Kennecott Utah Copper Fourth quarter production of copper, gold and molybdenum contained in concentrates improved significantly on the same period in 2012, reflecting higher ore throughput and slightly higher gold and molybdenum grades. The recovery of the open pit operations following the pit wall slide continues to progress better than originally planned, with completion of the new heavy vehicle access road achieved ahead of schedule enabling further remediation and waste movement to provide additional access to ore. Waste movement associated with the Cornerstone extension, which involves pushing back the south wall of Bingham Canyon to gain access to additional ore, continued during the quarter. Copper cathode production for 2013 was 19 per cent higher than in 2012, as a result of a planned smelter shutdown in 2012 and the rapid recovery of operations from the April pit wall slide. Escondida Mined copper production in the fourth quarter decreased three per cent on the same period in 2012 but was up seven per cent for the full year. This increase was driven by higher ore grades and ore throughput rates. Oyu Tolgoi / Turquoise Hill Resources Production for the fourth quarter was 32,941 tonnes of copper and 73,653 ounces of gold in concentrates ( Rio Tinto share 11,047 tonnes and 24,688 ounces). Concentrate production continues to ramp up with fourth quarter mined copper and gold eight per cent and 18 per cent higher than in the third quarter. Customers began to collect concentrate from the bonded warehouse in China during the fourth quarter and had withdrawn approximately 26,400 tonnes of concentrate by year end. Initial sales and logistics commissioning issues have been experienced since the start of operations and some sales volumes have been deferred until after the first quarter of 2014. Grasberg Freeport is due to release its 100 per cent operating data for the fourth quarter on 22 January 2014 . Northparkes On 29 July 2013 , Rio Tinto announced that it had reached a binding agreement for the sale of its 80 per cent interest in Northparkes. The transaction completed on 1 December 2013 . Production from Northparkes is therefore only included up to that date. Projects On 23 December 2013 , Rio Tinto announced a strategic review of its approximately 19.1 per cent shareholding in Northern Dynasty Minerals Ltd (Northern Dynasty), which owns 100 per cent of the Pebble Project in the Bristol Bay region of western Alaska . ALUMINIUM Rio Tinto share of production On 29 November 2013 , Rio Tinto announced that it intended to suspend alumina production at Gove and focus on its bauxite operations after determining the refinery was no longer a viable business in the current market environment. The Gove alumina refinery will progressively ramp down each of its three production stages. One stage will ramp down in February, a second stage between April and May and a third stage between June and July. The refinery will move to care and maintenance from July 2014 to ensure it is prepared for a potential re-start in the future. It will therefore continue to be reported separately from Rio Tinto Alcan . Bauxite Fourth quarter bauxite production set a new quarterly record and was seven per cent higher than the same period in 2012. Production for 2013 was up ten per cent against 2012. Full year production records were achieved at Weipa, Gove and Sangaredi to take advantage of higher third party demand. Alumina Fourth quarter Rio Tinto Alcan alumina production was one per cent lower than the same period in 2012. Production for the full year was one per cent higher than in 2012, as tonnes from the Yarwun expansion broadly offset the impacts of ex-tropical cyclone Oswald, which both Queensland refineries experienced in the first quarter of 2013. Aluminium Fourth quarter aluminium production was two per cent higher than the same period in 2012. Production for 2013 was also higher than in 2012 due to the lockout at Alma which occurred in the first seven months of 2012 and the ramp up of the AP60 plant in Arvida in 2013 which was partially offset by the shutdown of Shawinigan and the sale of St-Jean de Maurienne which completed on 16 December 2013 . Ramp up at the new AP60 plant has continued since announcing first metal production on 7 September. In December 2013 , the $1.1 billion plant achieved daily run rates equivalent to nameplate capacity of 60,000 tonnes per annum. ENERGY Coal Rio Tinto share of production (000 tonnes) Australian semi-soft and thermal coal production increased significantly during the year compared with 2012, with four mines (Hunter Valley Operations, Mount Thorley Warkworth, Bengalla and Clermont) achieving annual records. The substantial production increase was delivered through a transformation programme of productivity improvements, the completion of brownfield mine developments and the ramp up of the Clermont thermal coal mine. Full year hard coking coal volumes were marginally lower than in 2012. Coal recovery work at Hail Creek has been successfully completed following a geotechnical low wall failure experienced in July. The $2 billion extension of the Kestrel mine was officially opened in October, adding 20 years to the life of the operation. On 25 October 2013 , Rio Tinto reached a binding agreement for the sale of its 50.1 per cent interest in the Clermont Joint Venture to GS Coal Pty Ltd , a company jointly owned by Glencore Xstrata and Sumitomo Corporation , for $1.015 billion . The transaction is expected to complete in the first quarter of 2014. Semi-soft and thermal coal production in the fourth quarter was lower than the same period in 2012. This resulted from mine sequencing at Mount Thorley Warkworth and Hunter Valley Operations as well as from the closure of the Blair Athol mine in November 2012 , which is now in the process of being sold as announced on 3 October 2013 . Hard coking coal production was 23 per cent higher than during the fourth quarter of 2012, with reduced impacts from maintenance and upgrade stoppages. Full year volumes in Mozambique were higher than in 2012 as production at the mine continues to ramp up. Uranium Rio Tinto share of production (000 lbs) Uranium production for the quarter was adversely impacted by the failure of a process plant leach tank at both Energy Resources of Australia (ERA) and Rossing in December 2013 . Clean-up and recovery operations at ERA's Ranger processing plant are progressing. Processing operations remain suspended pending completion of a full investigation and regulatory approval to recommence. At Rossing, some processing operations were restarted on 11 January 2014 and will continue to be progressively restored during the first quarter. DIAMONDS & MINERALS Rio Tinto share of production At Argyle, carats recovered were 57 per cent higher than the fourth quarter of 2012 reflecting increased tonnes processed in the period and higher grades following commissioning of the underground operation earlier in the year. Carats recovered at Diavik were nine per cent higher than the fourth quarter of 2012 as a result of an increase in tonnes processed as the underground mine ramped up to full production, which was partially offset by lower grades. Titanium dioxide feedstock production was 20 per cent lower than the fourth quarter of 2012 due to a shutdown at Richards Bay Minerals (RBM) and the planned rebuild of one of nine furnaces at Rio Tinto Fer et Titane (RTFT). This rebuild has been delayed until market conditions for high grade titanium dioxide feedstock improve. Full year production was marginally higher than in 2012 as the impact of production cuts in response to market conditions was offset by the doubling of the Group's interest in RBM announced in September 2012 . The RTFT upgraded slag (UGS) production facility restarted in the fourth quarter but at reduced capacity. Borates production in the fourth quarter increased 22 per cent over the same period of 2012 in response to increased sales during the quarter and in preparation for the launch of the new modified direct dissolving of kernite (MDDK) process plant in 2014. Salt production in the fourth quarter increased 12 per cent compared with the same period in 2012 due to productivity improvements achieved during the quarter and maintenance activities which took place in the fourth quarter of 2012. Constructive discussions to develop the formal investment framework for Simandou continue with the Government of Guinea and Simfer partners. CORPORATE On 8 January 2014 , Turquoise Hill Resources announced the successful completion of its approximately $2.4 billion rights issue. Rio Tinto provided a standby commitment for the issue and undertook to exercise all of its rights. Following the transaction, Rio Tinto's shareholding in Turquoise Hill Resources remains unchanged at approximately 50.8 per cent. Turquoise Hill Resources will use the proceeds of the rights issue to repay the $1.8 billion interim funding facility and the $600 million bridge facility extended by Rio Tinto. This will result in around a $1.2 billion reduction in Rio Tinto's consolidated net debt. Prior to the announcement of the rights issue, Rio Tinto also secured extensions to the commitment letters received from 15 commercial banks for the Oyu Tolgoi project financing, which now expire on 31 March 2014 . EXPLORATION AND EVALUATION Pre-tax and pre-divestment expenditure on exploration and evaluation charged to the profit and loss account in 2013 was $948 million compared with $1,971 million in 2012. Of the 2013 expenditure, approximately 39 per cent was incurred by the Copper Group , six per cent by Iron Ore, 22 per cent by Energy, 13 per cent by Diamonds and Minerals, one per cent by Rio Tinto Alcan and the balance by Central Exploration. Exploration highlights In the Pilbara ( Western Australia ), data processing and interpretation of the airborne geophysical surveys continued. Drilling was completed on the planned 2013 targets. In the Bowen Basin ( Queensland, Australia ), drilling was completed at the Winchester South, Hillalong and Kemmis Creek projects. In Montana (US) drilling of the 2013 targets was completed at the Copper Cliff porphyry copper project. In Chile , drilling was completed at the Olimpo project, and geophysical surveys were completed at the Queen Elizabeth target (an alliance project with Codelco). In Russia , all field programmes were completed ahead of the onset of winter. Data compilation, interpretation and target generation work was completed for the Kirganik copper exploration project located in the southern Kamchatka peninsula. In Uzbekistan , geological mapping and ground geophysics targeting copper mineralization was completed at the Gava prospect. In China CRTX, the Chinalco Rio Tinto Exploration Joint Venture, signed a cooperation agreement in the Heilongjiang Province for copper exploration. At Tamarack ( USA ) drilling aimed to follow-up significant zones of nickel mineralization was completed. On the Saskatchewan Potash project in Canada , a joint venture with North Atlantic Potash Inc. , a subsidiary of JSC Acron , processing and interpretation of the 2012 3D seismic survey was completed and resource estimation completed. At Rossing ( Namibia ) resource estimation was completed incorporating the third phase of drilling at the Z20 uranium project. In Brazil in the Amargosa Orbit, field mapping and auger drilling continued across several targets. At the Suriapet diamond project in India , gravel sampling continued, but was hampered by monsoon rains. About Rio Tinto Rio Tinto is a leading international mining group headquartered in the UK , combining Rio Tinto plc , a London and New York Stock Exchange listed company, and Rio Tinto Limited , which is listed on the Australian Securities Exchange . Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals (borax, titanium dioxide and salt) and iron ore. Activities span the world and are strongly represented in Australia and North America with significant businesses in Asia , Europe , Africa and South America . Media Contact: Illtud Harri Tel: +44 (0) 20 7781 1152 Mobile: +44 (0) 7920 503 600 David Outhwaite Tel: +44 (0) 20 7781 1623 Mobile: +44 (0) 7787 597 493 Investor Contact: Mark Shannon Tel: +44 (0) 20 7781 1178 Mobile: +44 (0) 7917 576 597 David Ovington Tel: +44 (0) 20 7781 2051 Mobile: +44 (0) 7920 010 978

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: ENP Newswire

Story Tools