Rio Tinto releases second quarter production results
16 Julho 2020 - 7:26PM
Business Wire
Rio Tinto Chief Executive J-S Jacques said “We delivered a
strong performance, particularly in iron ore and bauxite,
demonstrating the underlying resilience of our business and ability
to adapt in difficult conditions. Our iron ore assets are
performing well in a strong pricing environment and we are on track
to meet our 2020 iron ore guidance. Despite various COVID-19
related challenges, all our assets have continued to operate, with
our first priority to protect the health and safety of all our
employees and communities.
“Our focus is to maintain a business as usual approach with many
safeguards at a very unusual time. Our operational teams are
continuing to run our assets safely so we can continue to
contribute to local and national economies and serve our customers.
We remain even more committed to our relationship with communities,
following the Juukan Gorge events in the Pilbara, and we are
engaging extensively with Traditional Owners around our operations
and across Australia.
“We are executing our value over volume strategy to drive
performance, productivity and free cash flow per share. We will
remain agile and ready to adapt to the changing operating and macro
environment.”
Production*
Q2
2020
vs Q2 2019
vs Q1 2020
H1
2020
vs H1 2019
Pilbara iron ore shipments (100%
basis)
Mt
86.7
+1%
+19%
159.6
+3%
Pilbara iron ore production (100%
basis)
Mt
83.2
+4%
+7%
161.1
+3%
Bauxite
Mt
14.6
+9%
+5%
28.4
+8%
Aluminium
kt
785
-2%
0%
1,568
-2%
Mined Copper
kt
132.8
-3%
0%
265.7
-5%
Titanium dioxide slag
kt
262
-13%
-10%
555
-7%
IOC iron ore pellets and concentrate
Mt
2.8
+9%
+8%
5.3
+6%
*Rio Tinto share unless otherwise
stated
Q2 Operational update
- We continue to prioritise the health and safety of our
employees and communities during this turbulent period. We achieved
an all injury frequency rate of 0.37 for the first half of 2020,
trending positively compared with a rate of 0.42 in 2019. We have
now fully embedded our rigorous COVID-19 health and hygiene
controls as we adapt to the new operating conditions. Our
operational sites and offices are moving ahead with the
implementation of fit for purpose COVID-19 screening as an
additional measure to protect our people and communities.
- We remain even more committed to our relationship with
communities, following the Juukan Gorge events in the Pilbara. We
are engaging extensively with Traditional Owners, including the
Puutu Kunti Kurrama and Pinikura people, and indigenous leaders in
the Pilbara and across Australia. On 19 June 2020, we announced a
board-led review of our heritage management processes within Iron
Ore to be completed by October 2020. We will also contribute to the
Inquiry by the Joint Standing Committee on Northern Australia that
will report to the Senate and we will continue to support the West
Australian government’s planned reform of the Aboriginal Heritage
Act 1972 (WA).
- Overall, we achieved a robust production performance with
volumes up 1% compared with the second quarter of 2019 on a copper
equivalent basis despite significant global challenges,
restrictions related to COVID-19 and the impact of the earthquake
at Kennecott, Utah.
- Pilbara iron ore shipments of 86.7 million tonnes (100% basis)
were 1% higher than the second quarter of 2019 despite the impact
of COVID-19 related operational controls. With 1.7 million tonnes
of port sales in the second quarter, we continue to grow our
portside business steadily, looking to better serve our existing
customers and open opportunities to sell to new customers who do
not participate in the seaborne market.
- Bauxite production of 14.6 million tonnes, 9% higher than the
second quarter of 2019, continued the first quarter trend following
the successful ramp-up of Amrun in 2019, and higher production at
the non-managed CBG joint venture in Guinea reflecting good
progress on the ramp-up of the expansion.
- Aluminium production of 0.8 million tonnes in the second
quarter was 2% lower than the second quarter of 2019 primarily due
to pot relining at Kitimat, the decision to operate the ISAL
smelter at 85% capacity, and the curtailment of the fourth pot line
at our New Zealand Aluminium Smelter (NZAS) in April 2020 due to
COVID-19 impacts.
- On 9 July 2020, we announced the wind-down of operations and
eventual closure of NZAS following the conclusion of the strategic
review.
- Second quarter mined copper was 3% lower than the same period
of 2019 due to lower head grade at Kennecott. Second quarter
refined copper was 67% lower than the same period of 2019 due to
the impact from the 5.7 magnitude earthquake in the first quarter
resulting in an unplanned flash converting furnace rebuild at
Kennecott, in addition to the planned 45-day smelter shutdown in
May/June.
- On 29 June 2020, we announced an agreement with Turquoise Hill
Resources and the Government of Mongolia on the preferred domestic
power solution for Oyu Tolgoi that paves the way for the Government
to fund and construct a State Owned Power Plant at Tavan Tolgoi.
Parties will work towards finalising a Power Purchase Agreement by
March 2021.
- The new Oyu Tolgoi mine design announced on 3 July 2020,
confirms that the caving method of mining remains valid. We are
targeting first sustainable production between October 2022 to June
2023 and development capital of $6.6 to $7.1 billion based on the
updated mine design of Panel 0. Material contained in pillars
retained on either side of Panel 0 have been reclassified from Ore
Reserves to Mineral Resources. Part of the material contained in
these pillars is expected to be recoverable at a later stage
following additional studies which are currently underway.
- Titanium dioxide slag production of 262 thousand tonnes was 13%
lower than the second quarter of 2019 partly due to COVID-19
restrictions in Quebec and South Africa.
- Production of pellets and concentrate at the Iron Ore Company
of Canada (IOC) was 9% higher than the same period of 2019 with
continued focus on concentrate feed to match market demand.
- Governments are gradually lifting restrictions on the movement
of goods and people as part of their COVID-19 recovery plans.
However, some restrictions remain in place or are being
reintroduced. As a result, there continues to be an impact on
projects in general although to a lesser degree than earlier in the
year.
- Capital expenditure is expected to be around $6 billion in 2020
(previously $5 to $6 billion) due to an appreciation in our major
operating currencies against the US dollar since the first quarter
and a reduced impact of COVID-19 on both sustaining and development
expenditure. Capital expenditure for 2021 and 2022 is expected to
be around $7 billion per year (previously $6.5 billion). This
includes spend from 2020 that has been re-phased as a result of
COVID-19 restrictions. Further details can be found in the
Investments, growth and development projects section below.
- We made a final payment of US$1.0 billion in Australian income
tax in June 2020 with respect to 2019 profits.
COVID-19
Our markets
In China, conditions have improved through the second quarter
and appear to be stabilising. While employment and trade
uncertainties remain, the construction and infrastructure sectors
are performing well; house prices and stock markets are also
recovering, lending support to consumer confidence. The United
States and Europe have started to re-open and recover. A second
wave of infections remains a key threat for advanced economies.
- China’s demand for iron ore continues while the recovery in
Japan and Europe is yet to begin meaningfully and is likely to be
subdued when it does.
- The automotive sector is showing initial signs of recovery from
a very low base, supporting demand for aluminium value-added
products (VAP).
- There has been limited impact on bauxite demand to date.
- China’s copper concentrate market remains favourable; however,
the US market is weaker. COVID-19 related supply disruptions are
between 3 to 4% of annual copper supply currently, in addition to
normal industry supply disruptions, and could increase
further.
Our assets
During the COVID-19 pandemic, we have implemented strict
protocols globally across the business. These measures are in line
with government guidance and directives, and advice from leading
medical experts and international health organisations on best
practice to keep our employees, contractors and partners healthy
and safe. These range from physical distancing to travel
restrictions, roster changes and team splits, to flexible working
arrangements, rapid screening and personal hygiene controls.
While uncertainties continue to exist in our business
environment, we are focused on our underlying resilience and
ability to adapt in a fast-moving environment. Key updates are
outlined below and full details of initiatives taken to date can be
found on our website.
Operations and Workforce
- With the de-escalation of health restrictions in Western
Australia, we are progressing the return to normal rosters at our
Iron Ore operations, construction and exploration projects. We
expect this transition to be completed by August 2020.
- Our office-based employees are beginning to return to offices
in regions where permitted. In most cases, employees are returning
to offices in alternate teams to reduce the risk of widespread
transmission and ensure business continuity.
- We have introduced screening programmes across sites as a
control to stop the spread of COVID-19. For the Pilbara
fly-in-fly-out workforce, we have conducted more than 50,000 checks
through facilities we established at Perth and regional airports as
an enhanced control for employees boarding flights to site.
- At our copper assets in Mongolia and the US, our teams have
used virtual technology to overcome some challenges related to
COVID-19 travel restrictions. At our Oyu Tolgoi underground project
in Mongolia, the use of virtual reality glasses has helped gain
access to global experts to support project progression during
construction and commissioning stages.
- At Richards Bay Minerals (RBM), furnaces are gradually ramping
up production following easing of restrictions in South Africa.
However, we are managing the situation carefully in the challenging
South African environment.
Products
- In the second quarter, we continued to focus on the
optimisation of IOC product mix to match market demand, moving from
pellet to concentrate.
- In aluminium, in response to market conditions we have reduced
the proportion of primary metal being produced as VAP, which
represented 40% of primary metal sold in the first half of 2020
(first half 2019: 54%).
Production Guidance
Rio Tinto share, unless otherwise
stated
2019 Actuals
H1 2020 (YTD)
2020
Pilbara iron ore (shipments,
100% basis) (Mt)
327
159.6
324 to 334
Bauxite (Mt)
55
28.4
55 to 58
Alumina (Mt)
7.7
4.0
7.8 to 8.2
Aluminium (Mt)
3.2
1.6
3.1 to 3.3
Mined copper (kt)
577
265.7
475 to 520
Refined copper (kt)
260
74.1
165 to 205
Diamonds (M carats)
17
7.7
12 to 14
Titanium dioxide slag (Mt)
1.2
0.6
Lower end of 1.2 to
1.4
IOC iron ore pellets and concentrate
(Mt)
10.5
5.3
10.5 to 12.0
Boric oxide equivalent (Mt)
0.5
0.26
~0.5
- Production guidance remains unchanged across all commodities
from the First Quarter Operations Review.
- We will continue to monitor and adjust production levels and
product mix to meet customer requirements in 2020, in line with our
value over volume strategy, government imposed restrictions related
to COVID-19, and any other potential COVID-19 related
disruptions.
The full second quarter production results are available
here
This announcement is authorised for release to the market by Rio
Tinto’s Group Company Secretary.
LEI: 213800YOEO5OQ72G2R82
Classification: 3.1 Additional regulated information required to
be disclosed under the laws of a Member State
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