By Barry FitzGerald
October 14, 2011
RIO Tinto is set to beat last year's record profit of $US14.32 billion comfortably after latest production figures showed it is well on the way to meeting its 2011 production target for iron ore - its profit mainstay.
The group's third (September) quarter production report, released yesterday, shows that Rio set new quarterly records for iron ore sales, as well as setting records for coking coal production.
Pilbara and Canadian iron ore production for companies owned or part-owned and managed by Rio was 64 million tonnes (Rio's share was 50 million tonnes) in the September quarter, up by 5 per cent on the previous corresponding period.
That took production for the first three quarters of the group's reporting year to 179 million tonnes (Rio's share was 141 million), leaving it requiring output of 61 million tonnes in the final quarter to hit its 240 million tonne target for the year.
The market pushed the stock $1.88, or 2.7 per cent, higher to $69.34. That was more than the 56¢, or 1.5 per cent, gain for BHP Billiton, which has yet to report for the September quarter.
Just as important for Rio in hitting production targets has been the ability of iron ore prices to be largely immune so far from the worst of the commodity price shakedown that has accompanied the equities rout on Europe's debt concerns.
Spot prices for the key steel-making raw material have weakened in the past month by about 9 per cent to $US162 a tonne. But that price is still well above last year's average of $US135 a tonne, ensuring that the bumper earnings from iron ore will continue for some time yet.
Most analysts have Rio earning more than $US17 billion for 2011, indicating a big second half given its profit for the June half was $US7.58 billion. That represented a 30 per cent improvement on the 2010 June-half result of $US5.8 billion.
Rio chief executive Tom Albanese highlighted iron ore's relative price strength in his commentary on the production report lodged with the stock exchange.
''Whilst we are mindful of current market volatility, the fundamentals are holding up well, particularly for bulk-traded [iron ore, coking and steaming coal] commodities,'' Mr Albanese said.
Coking coal prices have retreated recently but the spot price of $US256 a tonne remains well ahead of last year's average of $US217 a tonne. Steaming or energy coal has bucked the trend in recent weeks to edge higher to $US125 a tonne. Last year's average for the commodity was $US98 a tonne.
There were some areas of weakness in Rio's September production report, most notably in the copper division. A combination of industrial action in Chile and Indonesia and lower grades cut copper production by 32 per cent in the quarter from the previous corresponding period.
Sourced smh.com.au
October 14, 2011
RIO Tinto is set to beat last year's record profit of $US14.32 billion comfortably after latest production figures showed it is well on the way to meeting its 2011 production target for iron ore - its profit mainstay.
The group's third (September) quarter production report, released yesterday, shows that Rio set new quarterly records for iron ore sales, as well as setting records for coking coal production.
Pilbara and Canadian iron ore production for companies owned or part-owned and managed by Rio was 64 million tonnes (Rio's share was 50 million tonnes) in the September quarter, up by 5 per cent on the previous corresponding period.
That took production for the first three quarters of the group's reporting year to 179 million tonnes (Rio's share was 141 million), leaving it requiring output of 61 million tonnes in the final quarter to hit its 240 million tonne target for the year.
The market pushed the stock $1.88, or 2.7 per cent, higher to $69.34. That was more than the 56¢, or 1.5 per cent, gain for BHP Billiton, which has yet to report for the September quarter.
Just as important for Rio in hitting production targets has been the ability of iron ore prices to be largely immune so far from the worst of the commodity price shakedown that has accompanied the equities rout on Europe's debt concerns.
Spot prices for the key steel-making raw material have weakened in the past month by about 9 per cent to $US162 a tonne. But that price is still well above last year's average of $US135 a tonne, ensuring that the bumper earnings from iron ore will continue for some time yet.
Most analysts have Rio earning more than $US17 billion for 2011, indicating a big second half given its profit for the June half was $US7.58 billion. That represented a 30 per cent improvement on the 2010 June-half result of $US5.8 billion.
Rio chief executive Tom Albanese highlighted iron ore's relative price strength in his commentary on the production report lodged with the stock exchange.
''Whilst we are mindful of current market volatility, the fundamentals are holding up well, particularly for bulk-traded [iron ore, coking and steaming coal] commodities,'' Mr Albanese said.
Coking coal prices have retreated recently but the spot price of $US256 a tonne remains well ahead of last year's average of $US217 a tonne. Steaming or energy coal has bucked the trend in recent weeks to edge higher to $US125 a tonne. Last year's average for the commodity was $US98 a tonne.
There were some areas of weakness in Rio's September production report, most notably in the copper division. A combination of industrial action in Chile and Indonesia and lower grades cut copper production by 32 per cent in the quarter from the previous corresponding period.
Sourced smh.com.au
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