Today, Rio Tinto (ASX: RIO) released its second-quarter operations report with robust production figures despite adverse weather affecting a copper mine and reduced spending across the board. CEO Sam Walsh highlighted the new mine in Mongolia as a milestone for the business and its iron ore expansion in the Pilbara by saying it remains "remains on track to deliver first tonnes by the end of this quarter", showing his commitment to increasing its record production levels.
Some key figures from the report include:
- Iron ore shipments were up 1% year on year
- Production of iron ore was up 7%
- Hard coking coal output was down 5%
- Aluminum production was up 7%
- Copper output was up 10%
Investors were expecting solid results from Rio despite hard seasonal conditions and lack of progress in Mozambique. The production targets onwards are somewhat promising for investors even though the company is facing lower commodity prices across the board.
With new projects coming online and a continued strategy to cut costs, the company hopes to:
- Increase mined copper production to 565,000 tonnes for 2013
- Increase iron ore production to 265 million tonnes
- Continue its current $483 million cost cutting in exploration, which is on track for $750 million for 2013
- Continue Pilbara "290" expansion, on track for production this year despite adverse weather conditions
It has also:
- Increased alumina output guidance to 7.3 million tonnes
- Increased diamond output guidance to 15.7 million carats
- Announced its expected effective tax rate, excluding royalties, of between 35%-40%
Foolish takeaway
The results represent modest but solid returns for the company, particularly in the face of lower commodity prices and increased competition. Rio is likely to focus on continuing to be the highest quantity exporter of iron ore in Australia and maintain the bottom line by increasing production.
The company's reduced expenditure and increased output guidances are also positive, especially as some investors may have become concerned the severe cost cutting would take its toll on production. The market has reacted and pushed up the share price by 1.5%.
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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.
