SYDNEY: Global miner Rio Tinto said on Tuesday it could ship up to an additional 10 million tons of iron ore in 2018 worth $780 million (SR2.925 billion) at today’s prices after reporting a 1 percent rise in 2017 shipments.
The slight lift in 2017 output to 330.1 million tons came as the average sales price for its ore jumped 20 percent over the year to $64.80, buoyed by strong demand from Chinese steelmakers.
The price rise helped the world’s no. 2 iron ore miner boost returns to shareholders after a bumper first-half profit. Rio is due to report its 2017 full-year profit on February 7, with forecasts centered around $8.5 billion, up 85 percent.
Rio on Tuesday also stuck to a target of 330-340 million tons of iron ore from its new Silvergrass mine, which is ramping up operations in Australia’s Pilbara.
Silvergrass yielded about 2 million tons in 2017 and at peak production should yield 10 million tons a year, according to the company.
The iron ore price stood at $78.05 per ton on Jan. 12, according to Metal Bulletin. However, uncertainty over Chinese demand has led to forecasts for prices to fall as the year progresses, which could cut Rio’s take from any additional sales.
“The business performed well in the fourth quarter, and we finished the year in line with guidance across all major products,” Chief Executive Jean-Sebastien Jacques said in a statement.
Fourth-quarter iron ore shipments rose 3 percent to 90 million tons from the same period a year ago and 5 percent against the previous quarter.
The last quarter is typically the strongest as miners boost exports ahead of the first quarter, a high cyclone-risk period in Australia.
In other commodities, Rio Tinto stuck to a 2018 target of 510,000-610,000 tons of mined copper and 225,000-265,000 tons of refined copper. Aluminum production will reach 3.5-3.7 million tons.
For 2017, aluminum production eased 1 percent and mined copper output fell 9 percent.
The mined copper decline followed a 43-day strike at Rio’s Escondida mine in Chile in the first quarter and a 22 percent drop in output from the Oyu Tolgoi open pit mine in Mongolia as sources of higher grade ore were fully depleted.
The slippage in copper output should be more than offset by better copper prices, which have climbed 25 percent in the past year, said Shaw and Parners analyst Peter O’Connor.
Separately on Tuesday, Rio Tinto subsidiary Turquoise Hill Resources said it was being asked to pay $155 million in tax arrears by Mongolia after an audit of Oyu Tolgoi’s tax payments between 2013 and 2015.
Turquoise Hill, which is 51 percent owned by Rio Tinto, said it was of the “firm view” the mine had paid all required taxes and charges. Turquoise Hill holds 66 percent of Oyu Tolgoi.
Rio Tinto targets modest hike in 2018 iron ore shipments
Rio Tinto targets modest hike in 2018 iron ore shipments
