Rio Tinto, an Australian miner posted record first-half financial results driven by soaring iron ore prices on strong demand from China.
In the first half of 2021, the miner reported a jump in underlying EBITDA by 118pc to $21.04bn and earnings rose by 156pc to $12.17bn from $4.75bn from Jan-June 2020.
Despite COVID-19 related restrictions and logistic challenges, government stimulus fuelled demand for finished products. Supply remained tight, pushing iron ore prices upwards. Infrastructure boost in China and iron ore supply challenges in Brazil drove prices of iron ore to record highs of above $234/mt cfr China earlier this year.
Out of total underlying EBITDA in H1 2021, the company’s iron ore business accounted for 76pc to $16.06bn, surged by 109pc from the prior-year period.
Total shipments of iron ore, however, dropped by 3pc to 154.1mn mt amid wet weather, mines replacement, and limited labor resources. Sales revenue was $23.07bn up 88pc in H1 2021. The average price for iron ore shipments of Rio Tinto in H1 2021 jumped by 97pc from the prior year to $168.4/dry mt fob Australia port. China was the largest importer for Rio Tinto with 5.4mn mt, a volume more than double compared to the prior year.
Iron ore shipments from the Pilbara decreased by 3pc compared to H1 2020 due to wet weather.
Outlook for the second half remains strong. Rio Tinto has announced its investment decision following the strong demand for the raw material for electric vehicle batteries. The risks for H2 include COVID-19 disruptions and management of cultural heritage, said the miner.
Aluminum
Rio’s aluminum business delivered a significant rise in underlying EBITDA and a substantial increase in cash flow, driven by a rebound in sales prices and heightened demand for value-added products as markets recovered from the impact of COVID-19.
The Underlying EBITDA of $1.9bn was more than double 2020’s first half. The average realized aluminum price was at $2,626/mt, 42pc higher than H1 2020 at $1,849/mt.
Copper
Driven by a solid smelter performance at Kennecott and higher gold grades at Oyu Tolgoi, the copper business too recorded strong results. These compensated for lower volumes at Escondida, where ongoing preventive measures in response to the resurgence of COVID-19 continued to impact workforce availability.
For copper, underlying EBITDA was almost three times higher than H1 2020 at $2bn amid demand recovery from the impact of the global COVID-19 pandemic.
There was a 66pc increase in realized copper price to ¢415/lb before taking into account the provisional pricing benefit to revenues of $202mn in 2021 first half.