Rio Tinto reports strong results for its copper division

October 16, 2013

A quicker than expected recovery from the April landslide at the Bingham Canyon Mine near Salt Lake City, UT and the start of production at the Oyu Tolgoi Mine in Mongolia helped Rio Tinto report a surprisingly strong rebound by its copper division and consistent performance by its iron ore business on Oct. 15. The market reacted favorably as shares rose 2.5 percent to close $63.20 on the news.

In an upbeat set of September-quarter results, Rio Tinto said the impact of a wall slide the Bingham Canyon Mine would not be as bad as first feared, and the company improved its full-year copper guidance for the second time since the impact of the wall slide was first reported in April.

The most recent promise to mine 565 kt of copper over the year was upgraded to 590 kt on Oct. 15, and the improving outlook has coincided with stronger copper prices the weeks leading up to the report.

Rio Tinto said the Bingham Canyon Mine will now produce the extra 35 kt.

Deutsche analyst Paul Young told the Sydney Morning Herald that the speedy recovery in Utah was the highlight of report.

''This operation will end up doing close to what it was expected to do before the wall slip,'' he said.

Copper ranks as Rio Tinto’s second most important division, and has this year begun production at the Oyu Tolgoi Mine in Mongolia, as well as continuing with its long-standing joint venture at Escondida in Chile.

While Oyu Tolgoi is producing at close to the desired rates, Rio Tinto is still unable to cash in on its new mine fully, with complications involving customs in China preventing buyers from collecting their purchase.

The miner said it hoped to have the issue resolved soon.

Rio Tinto's iron ore division remains on track to produce 265 Mt in 2013, after a solid quarter that produced 53.3 Mt of iron ore from operations in Australia and Canada.

There was no update on whether Rio would continue expanding its Pilbara iron ore division to 360 Mt/a the Sydney Morning Herald reported.
Rail and port facilities are already capable of exporting 360 Mt, but extra mines would be required to reach the target.

Expanding to 360 Mt is expected to cost about $US5 billion, and chief executive Sam Walsh has previously said the company would eventually reach the target, but at a speed of development yet to be decided.

Rio shares rose 2.5 per cent, or $1.55, to close at $63.20.



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