Freight Rail

Rio capitalises on iron ore price in 2016

Rio Tinto took advantage of a sustained improvement in the price of iron ore in 2016, shipping 327.6 million tonnes of Pilbara ore in the calendar year, up 3% on its 2015 figure.

In its production results for the final quarter of 2016, the mining giant reported 87.7 million tonnes of iron ore shipped from the Pilbara in the December quarter, up 8% on the September quarter, and 1% year-on-year.

It said roughly 20% of sales in 2016 were priced with reference to the prior quarter’s average index lagged by one month, and 62% of sales were made on a cost and freight (CFR) basis, with the remainder sold free on board (FOB).

It also announced record bauxite production of 47.7 million tonnes for the full calendar year, up 9%, which contributed to a 10% increase in aluminium production to 3.65 million tonnes.

Aluminium production was bolstered by “record annual production at ten smelters, notably at the modernised and expanded Kitimat smelter, which has produced at nameplate capacity since April 2016”. Kitimat is in British Columbia, Canada.

Mined copper production was up 4% to 523,300 tonnes in 2016.

While Rio’s hard coking coal production was up 4% to 8.1 million tonnes, and semi-soft coal was up 12% to 4.1 million tonnes, thermal coal production was down 7% to 17.3 million tonnes.

“Increased thermal coal production from Hail Creek, Kestrel and Mt Thorley Warkworth partially offset lower volumes, which resulted from the restructure of Coal & Allied and the divestment of Bengalla in early 2016,” the company said.

Rio Tinto chief executive J-S Jacques said the company planned to take its “disciplined approach” into 2017, “with the continued focus on productivity, cost reduction and commercial excellence”.

“We have delivered a strong operational performance in 2016, underpinned by our drive for efficiency and maximising cash flow,” Jacques said.

“This will ensure that we continue to deliver value for our shareholders.”