Rio Tinto’s Q3 2020 Pilbara iron ore production was down by only a percent from the prior-year quarter. The company’s aluminum output rose by 1pc in Q3 from a year ago and mined copper fell by 18pc, according to the company’s operational update on Friday.
The global miner maintained its 2020 production guidance across all key products.
Rio Tinto expressed optimism about a widespread recovery in 2021. The company said global economic activities were generally strong in Q3 2020 but cited high-frequency data suggesting a slow rate of recovery in most economies, with the dissipation of pent-up demand and renewed lockdowns.
Reporting its production figures on Oct 15, the company indicated that iron ore inventories are likely to grow modestly as China’s steel consumption eases from record-high levels and scrap consumption rises, and steelmakers expected to produce strong volumes in Q4 2020. The Asian nation’s commodity demand is currently supported by intensive stimulus measures and iron ore demand is at a record high amid a recovery in seaborne trades.
Steel production in Japan, Taiwan, South Korea, and Europe is on the recovery path, however, production outside China remains significantly lower from the prior year. Globally, the auto sector continues to recover, which is supporting some demand for value-added aluminum products (VAP) but remains below pre-pandemic levels.
|Rio Tinto Q3 production|
|Q3 2020||YoY change||QoQ||9-months||YoY change|
|Pilbara iron ore||86.4mn mt||-1%||4%||247.4mn mt||2%|
|Bauxite||14.5mn mt||5%||-1%||42.8mn mt||7%|
|IOC iron ore||2.3mn mt||-21%||-15%||7.7mn mt||-4%|
Key operations highlights
The miner noted that its Pilbara mine is operating close to normal levels after the COVID-19 related lockdowns lifted. The mine’s iron ore production in Q3 2020 fell by a percent from Q3 2019 to 86.4mn mt on a 100pc basis. Shipment at Pilbara fell by 5pc due to planned maintenance activity at the port.
Iron ore pellets and concentrate production at Iron Ore Company of Canada (IOC) fell by 21pc in Q3 2020 from the prior-year quarter amid deferment of a planned maintenance shutdown from June to September due to COVID-19-related travel restrictions. A power failure caused by harsh weather conditions and mechanical issues also reduced production during the quarter.
- The company’s bauxite output rose by 5pc from a year ago to 14.5mn mt. Production increased across all sites from Q3 2019. Bauxite
- production was at a quarterly high at CBG joint venture in Guinea. Aluminum production rose by a percent to 0.8mn mt in Q3 2020.
- Mined copper output declined by 18pc from Q3 2019 because of a lower grade at Kennecott due to pit sequencing to accommodate the extended smelter outage, Rio Tinto noted. Refined copper production fell by 57pc amid delays in restart of Kennecott smelter, but the company is confident of achieving its 2020 refined copper guidance of 135,000-175,000mt. Kennecott smelter has commenced operations and will be fully operational by the end of October.
- With regards to Turquoise Hill Resources’ Oyu Tolgoi project in Mongolia, preliminary indications suggest the first sustainable production to commence between October 2022 and June 2023. Development cost estimates remain at $6.6-7.1bn. The company entered an MOU with TRQ for financing the Oyu Tolgoi Underground Project.