Metal markets bleed for Rio Tinto

I-Net Bridge | Wed, 15 Jul 2009 09:56
[miningmx.com] -- GLOBAL resources giant Rio Tinto said Wednesday that markets remained tough in the second quarter, as expected, particularly in aluminium.

"The production curtailments announced in January in this product group have started to take effect and are reflected in this report," said Tom Albanese, CEO of Rio Tinto.

"We continue to press ahead with actions to reduce costs across the board, align production with demand, and bring down levels of net debt. We have successfully completed our $15.2bn rights issue this month and during the course of this year we have agreed divestments to the value of $3.7bn."

Rio Tinto's global iron ore production was up 8% compared with the second quarter of 2008. Pilbara iron ore production of 53 million tonnes (42 million tonnes on an attributable basis), was up 11% on the second quarter of 2008, reflected operations running at full capacity.

Following production cutbacks in response to the sharp fall in demand, bauxite production was down 14%, alumina was down 6% and aluminium was down 5%, compared with the second quarter of 2008. Second quarter trading in the aluminium business continued to experience difficult conditions and showed a slight mprovement on the first quarter of 2009, the group said.

Mined copper production was down 1% on the second quarter of 2008. Recovery in copper grades at Kennecott Utah Copper and Grasberg was offset by lower copper grades and continued operational issues at Escondida, it said.

Refined copper production was up 23% on the second quarter of 2008 from improved performance and higher concentrate grades at Kennecott Utah Copper and higher cathode production at Escondida.

Australian hard coking coal was down 7% on the second quarter of 2008. Australian thermal coal production was up 3% on the same period.

On 5 June Rio Tinto announced that it had entered a non-binding agreement with BHP Billiton to establish a production joint venture of both companies' Western Australian iron ore assets.

During 2009 Rio Tinto has announced divestments totalling $3.7bn, including $1.2bn for the Alcan Packaging Food Americas division announced on 6 July.

Rio Tinto also successfully completed its $15.2bn rights issue on 3 July with valid acceptances of 96.97% for Rio Tinto plc and 94.76% for Rio Tinto Limited.