HomeBase MetalsRio Tinto expects to remain well positioned

Rio Tinto expects to remain well positioned

Tom Albanese,
Chief Executive,
Rio Tinto
Melbourne, Australia — MININGREVIEW.COM — 16 January 2009 – Overall mineral production for the Rio Tinto Group – the third-largest mining company in the world – was in line with expectations in the fourth quarter of 2008.

Making this announcement here, chief executive Tom Albanese said: “We are taking firm action in response to the global economic downturn and – given the resilience of Rio Tinto’s low cost assets –we expect to remain well positioned when recovery comes.”

The company’s fourth quarter results review revealed that global production of iron ore was down 18 p% on the fourth quarter of 2007, following a 10% reduction in the Pilbara annualised production.

Annual iron ore production from the company’s Pilbara operations of 175 million tonnes was up 7% on 2007. Pilbara iron ore shipments for 2008 of 171 million tonnes were up 7% on 2007, in line with previous guidance.

The review added that bauxite production had risen by 19%, alumina by 26% and aluminium by 21%, compared with the fourth quarter of 2007, reflecting the completion of the Alcan acquisition with effect from 24 October 2007.

On a pro-forma basis the respective increases for bauxite and alumina were 6% and 3%, while aluminium had declined by 2%, primarily due to production cutbacks in France, New Zealand and the UK.

Continued recovery in copper grades at Kennecott Utah Copper were offset by a further grade decline and operational difficulties at Escondida, leading to an overall decrease in mined copper of 18%, compared with the fourth quarter of 2007, and an associated increase in unit costs.

Australian hard coking and thermal coal production had risen by 40 % and 21% respectively on the fourth quarter of 2007, and uranium production was up 20% due to higher grades.

The review went on to say that fourth quarter earnings at Rio Tinto Alcan would be negatively impacted by the sharp decline in the aluminium price. In addition, inventories were expected to be written down to reflect realisable values at the year-end.

Copper provisional pricing was expected to lower underlying earnings by approximately US$360 million in the second half of 2008, and estimated total exploration and evaluation expenditure for the year was US$1 135 million (pre-tax).