Utah recovery raises Rio result
Rio Tinto shares rose sharply on Tuesday after the miner revealed a surprisingly strong rebound by its copper division and consistent performance by its iron ore business.
In an upbeat set of September-quarter results, Rio said the impact of a wall slide at a copper mine in the US would not be as bad as first feared, and the miner improved its full-year copper guidance for the second time since the impact of the wall slide was first reported in April.
The most recent promise to mine 565,000 tonnes of copper over the year was upgraded to 590,000 tonnes on Tuesday, and the improving outlook has coincided with stronger copper prices in recent weeks.
The mine that suffered the wall slide, the Kennecott operation in Utah, will now produce the extra 35,000 tonnes.
Deutsche analyst Paul Young said speedy recovery in Utah was the highlight of Tuesday's report.
"This operation will end up doing close to what it was expected to do before the wall slip," he said.
Copper ranks as Rio Tinto's second most important division, and has this year begun production at the Oyu Tolgoi mine in Mongolia, as well as continuing with its long-standing joint venture at Escondida in Chile.
"If OT and Escondida continue to perform strongly they can actually exceed their guidance for the full year," Mr Young said.
While Oyu Tolgoi is producing at close to the desired rates, Rio is still unable to cash in on its new mine fully, with a customs stoush in China preventing buyers from collecting their purchase.
The miner said it hoped to have the issue resolved soon.
Rio's iron ore division remains on track to produce 265 million tonnes in 2013, after a solid quarter that produced 53.3 million tonnes of iron ore from operations in Australia and Canada.
There was no update on whether Rio would continue expanding its Pilbara iron ore division to 360 million tonnes per year.
Rail and port facilities are already capable of exporting 360 million tonnes, but extra mines would be required to reach the target.
Expanding to 360 million tonnes is expected to cost about $US5 billion, and chief executive Sam Walsh has previously said the company would eventually reach the target, but at a speed of development yet to be decided.
Rio shares rose 2.5 per cent, or $1.55, to close at $63.20.