Rio Tinto Ltd (ASX: RIO) shares are edging higher on Wednesday.
At the time of writing, the mining giant's shares are up almost 0.5% to $117.30.
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Why are Rio Tinto shares rising?
Investors have been bidding the Rio Tinto share price higher today after responding reasonably positively to the miner's quarterly update.
For the three months ended 30 June, Rio Tinto's key Pilbara operations delivered a 2% increase in production to 81.3 million tonnes thanks partly to Gudai-Darri achieving sustained nameplate capacity.
This took Rio Tinto's first-half production to 160.5 million tonnes, which represents an increase of 7% over the prior corresponding period.
Not all of the company's iron ore was shipped, though. Due to planned major maintenance at the Dampier port and a train derailment, Rio Tinto's iron ore shipments were 79.1 million tonnes for the period, which was down 4% quarter on quarter.
Nevertheless, management is expecting a strong finish to the year thanks to continued operational improvements across the Pilbara system and the implementation of the Safe Production System.
This is expected to lead to full-year shipments at the upper half of its original 320 to 335 million tonne guidance range with unit costs in line with expectations.
It wasn't all good news
While the key iron ore operations are on track to achieve guidance, the same cannot be said for its alumina, refined copper, and iron ore pellets operations. This could be why Rio Tinto shares haven't exactly burst out of the gates today.
Rio Tinto has downgraded its production guidance for these metals slightly and increased its copper unit cost guidance. The latter has been increased by 20 US cents per pound to 180 US cents to 200 US cents per pound.
Management also provided an update on the Rincon lithium project in Argentina. It advised that its US$140 million estimate and schedule to develop the starter plant remains under review in response to cost escalation.
What are brokers saying?
The team at RBC was relatively pleased with the update and highlights that it was largely in line with its own expectations. However, it was short of consensus estimates, which the broker feels could mean consensus downgrades are on the way. It said:
Nothing too material in the production numbers albeit we would expect some modest consensus downgrades into H1.
Though, the broker appears to believe that the market may overlook this given the miner's outlook commentary "suggests the company is now back on top of the Pilbara operations." It expects this to "allow investor confidence on the operational side to continue to improve."
