Rio Tinto (RIO, Financial) reported a 1% increase in iron ore shipments for the third quarter, slightly below market expectations, due to improved production from its Pilbara operations. Despite the improvement, iron ore prices remained under pressure with a bleak demand outlook.
For the three months ending September 30, the company's Pilbara operations shipped 84.5 million tons of iron ore, compared to 83.9 million tons in the same period last year, falling short of the 84.74 million tons analysts anticipated.
After raising production in the September quarter, Rio Tinto reaffirmed its annual guidance for iron ore shipments, expecting to ship between 323 million tons and 338 million tons from the Pilbara operations by the end of the year.
During the same period, the company saw an 8% increase in bauxite production to 15.1 million tons and a 7% rise in titanium dioxide slag production to 263 million tons. However, aluminum production fell by 2% and mined copper by 1%, while its Canadian Iron Ore Company saw an 11% drop in iron ore pellet and concentrate production.
The only revision in Rio Tinto's guidance was for the IOC production target, which was reduced due to a 11-day plant shutdown caused by forest fires in July. The target was lowered from 9.8 million-11.5 million tons to 9.1 million-9.6 million tons.
CEO Jakob Stausholm announced that the Simandou iron ore project is set to commence production next year, with lithium production from the Roncon plant expected by the end of this year. Meanwhile, copper output from the Oyu Tolgoi underground mine continues to grow.
Rio Tinto recently agreed to acquire Arcadium Lithium (ALTM) for $6.7 billion, positioning itself as the world's third-largest battery metals miner. Stausholm highlighted that this acquisition enhances Rio Tinto's presence in a "high-growth, attractive market."
Improved shipment volumes in the second quarter were due to low port inventories and a train collision. Pilbara's iron ore production for the September quarter was 84.1 million tons, compared to 83.5 million tons last year.
Rio Tinto stated that the unit cash cost for Pilbara iron ore this year will be in the upper half of its expected $21.75 to $23.50 per ton range, reflecting heightened inflation expectations.
