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Rio Tinto (RIO) Reports a 2% Decline in Q2 Iron Ore Production
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Rio Tinto (RIO - Free Report) reported iron ore shipments (on a 100% basis) of 80.3 million tons (Mt) for the second quarter of 2024, which rose 2% year over year, attributed to the drawdown of port stocks. The company’s iron ore production dipped 2% to 79.5 Mt as ore depletion offset productivity gains. A train had derailed in mid-May at its Western Australia iron ore operations, which led to six days of lost rail capacity and full stockpiles at some mines, impacting shipment and production numbers for the quarter.
Bauxite production rose 9% to 14.7 Mt in the second quarter. The increase was attributed to the implementation of the Safe Production System, especially at Weipa, wherein the company achieved higher plant utilization and feed rates.
Rio Tinto’s aluminum output was up 1% year over year to 824 kt, as aluminum smelters continued to deliver stable performances. Alumina production declined 10% to 1.7 Mt, which reflected the impacts of the outage of the third-party-operated Queensland Gas Pipeline in March.
In the second quarter, mined copper production was 171 thousand tons, 18% higher than the year-ago quarter. Production at Kennecott was 30% higher year over year as a conveyor outage had impacted production in the year-ago quarter. Copper production at Escondida increased 12% year over year aided by a 7% improvement in concentrator feed grade as mining continued into higher grade zones, combined with 12% higher concentrator output. Oyu Tolgoi was 23% higher year over year driven by the ramp-up in underground production.
Titanium dioxide slag production declined 22% compared with the year-ago quarter primarily driven by weak market conditions. Production at Iron Ore Company of Canada was 6% higher on a year-over-year basis as production had been impacted by wildfires in the last year quarter.
Production Guidance for 2024
Rio Tinto expects Pilbara iron ore shipments (100% basis) in the range of 323-338 Mt. The range indicates a year-over-year decline of 3% to growth of 2%. SP10 levels, which include other lower-grade products, are expected to remain elevated until replacement projects are delivered.
Bauxite production is expected to be near the top-end of its range of 53-56 Mt compared with 54.6 Mt in 2023. RIO cautioned that the iron ore shipments and bauxite production guidance remain subject to weather conditions. Also, Pilbara shipment guidance remains subject to the timing of approvals for planned mining areas and heritage clearances.
Alumina production is anticipated between 7.0 and 7.3 Mt (previously 7.6 and 7.9 Mt). This is lower than the reported output of 7.5 Mt in 2023 as the Gladstone operations continue to operate at reduced rates following the breakage of the third-party gas pipeline. Rio Tinto expects gas supplies from the pipeline to resume normal levels by the end of this year.
Aluminum production is expected in the band of 3.2-3.4 Mt compared with 3.3 Mt produced in 2023.
At Kennecott, the company made changes to the mine plan to manage geotechnical risk in the area. This delayed access to pit ore resulted in additional lower-grade stockpiled material being processed. Rio Tinto is currently reworking the mine plan and will provide further details in the operations review for the third quarter of 2024. It expects mined copper production for 2024 to be near the bottom end of the earlier range of 660-720 thousand tons. The company had mined 620 thousand tons of copper in 2023.
Refined copper is predicted to be between 230 kt and 260 kt, which indicates a 40% year-on-year improvement at the midpoint. Titanium dioxide slag production is expected to be between 0.9 Mt and 1.1 Mt.
Cost Guidance for 2024
Rio Tinto expects Pilbara iron ore unit cash costs between $21.75 and $23.50 per ton. Copper C1 unit costs are forecast between $1.40 and $1.60 per pound.
Price Performance
In a year, shares of Rio Tinto have dipped 1% against the industry’s 4.2% growth.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2024 earnings indicates year-over-year growth of 281.6%. CRS beat the consensus estimate in each of the last four quarters, the average earnings surprise being 15.1%. The company's shares have soared 109% in the past year.
The Zacks Consensus Estimate for Eldorado Gold’s fiscal 2024 earnings indicates year-over-year growth of 92.4%. EGO’s earnings outpaced the consensus estimate in each of the last four quarters, the average earnings surprise being 430.7%. The company's shares have gained 49% in the past year.
The Zacks Consensus Estimate for Kinross' current-year earnings indicates a rise of 25% from the year-ago reported level. KGC beat the consensus estimate in each of the last four quarters, the average earnings surprise being 46%. The stock has gained 79.5% in the past year.
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Rio Tinto (RIO) Reports a 2% Decline in Q2 Iron Ore Production
Rio Tinto (RIO - Free Report) reported iron ore shipments (on a 100% basis) of 80.3 million tons (Mt) for the second quarter of 2024, which rose 2% year over year, attributed to the drawdown of port stocks. The company’s iron ore production dipped 2% to 79.5 Mt as ore depletion offset productivity gains. A train had derailed in mid-May at its Western Australia iron ore operations, which led to six days of lost rail capacity and full stockpiles at some mines, impacting shipment and production numbers for the quarter.
Bauxite production rose 9% to 14.7 Mt in the second quarter. The increase was attributed to the implementation of the Safe Production System, especially at Weipa, wherein the company achieved higher plant utilization and feed rates.
Rio Tinto’s aluminum output was up 1% year over year to 824 kt, as aluminum smelters continued to deliver stable performances. Alumina production declined 10% to 1.7 Mt, which reflected the impacts of the outage of the third-party-operated Queensland Gas Pipeline in March.
In the second quarter, mined copper production was 171 thousand tons, 18% higher than the year-ago quarter. Production at Kennecott was 30% higher year over year as a conveyor outage had impacted production in the year-ago quarter. Copper production at Escondida increased 12% year over year aided by a 7% improvement in concentrator feed grade as mining continued into higher grade zones, combined with 12% higher concentrator output. Oyu Tolgoi was 23% higher year over year driven by the ramp-up in underground production.
Titanium dioxide slag production declined 22% compared with the year-ago quarter primarily driven by weak market conditions. Production at Iron Ore Company of Canada was 6% higher on a year-over-year basis as production had been impacted by wildfires in the last year quarter.
Production Guidance for 2024
Rio Tinto expects Pilbara iron ore shipments (100% basis) in the range of 323-338 Mt. The range indicates a year-over-year decline of 3% to growth of 2%. SP10 levels, which include other lower-grade products, are expected to remain elevated until replacement projects are delivered.
Bauxite production is expected to be near the top-end of its range of 53-56 Mt compared with 54.6 Mt in 2023. RIO cautioned that the iron ore shipments and bauxite production guidance remain subject to weather conditions. Also, Pilbara shipment guidance remains subject to the timing of approvals for planned mining areas and heritage clearances.
Alumina production is anticipated between 7.0 and 7.3 Mt (previously 7.6 and 7.9 Mt). This is lower than the reported output of 7.5 Mt in 2023 as the Gladstone operations continue to operate at reduced rates following the breakage of the third-party gas pipeline. Rio Tinto expects gas supplies from the pipeline to resume normal levels by the end of this year.
Aluminum production is expected in the band of 3.2-3.4 Mt compared with 3.3 Mt produced in 2023.
At Kennecott, the company made changes to the mine plan to manage geotechnical risk in the area. This delayed access to pit ore resulted in additional lower-grade stockpiled material being processed. Rio Tinto is currently reworking the mine plan and will provide further details in the operations review for the third quarter of 2024. It expects mined copper production for 2024 to be near the bottom end of the earlier range of 660-720 thousand tons. The company had mined 620 thousand tons of copper in 2023.
Refined copper is predicted to be between 230 kt and 260 kt, which indicates a 40% year-on-year improvement at the midpoint. Titanium dioxide slag production is expected to be between 0.9 Mt and 1.1 Mt.
Cost Guidance for 2024
Rio Tinto expects Pilbara iron ore unit cash costs between $21.75 and $23.50 per ton. Copper C1 unit costs are forecast between $1.40 and $1.60 per pound.
Price Performance
In a year, shares of Rio Tinto have dipped 1% against the industry’s 4.2% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Rio Tinto currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , Eldorado Gold (EGO - Free Report) and Kinross Gold Corporation (KGC - Free Report) . These three companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2024 earnings indicates year-over-year growth of 281.6%. CRS beat the consensus estimate in each of the last four quarters, the average earnings surprise being 15.1%. The company's shares have soared 109% in the past year.
The Zacks Consensus Estimate for Eldorado Gold’s fiscal 2024 earnings indicates year-over-year growth of 92.4%. EGO’s earnings outpaced the consensus estimate in each of the last four quarters, the average earnings surprise being 430.7%. The company's shares have gained 49% in the past year.
The Zacks Consensus Estimate for Kinross' current-year earnings indicates a rise of 25% from the year-ago reported level. KGC beat the consensus estimate in each of the last four quarters, the average earnings surprise being 46%. The stock has gained 79.5% in the past year.