Archive | Rio Tinto

Iron Ore Takes a Battering as Bear Market Engulfs China Futures – by Ranjeetha Pakiam (Bloomberg News – March 22, 2017)

Iron ore is getting battered. After rounds of warnings that this year’s rally may be overdone, the raw material is in retreat as doubts gather about the strength of demand in China as steel sells off and record port stockpiles put a spotlight on rising supplies.

In China, futures on the Dalian Commodity Exchange sank into a bear market as steel in Shanghai posted the longest run of declines this year, while the SGX AsiaClear contract in Singapore fell for a fourth day. Benchmark spot prices from Metal Bulletin Ltd. extended a loss below $90 a dry metric ton to the lowest since Feb. 9.

“Steel demand in China is clearly robust, but iron ore prices remain very elevated versus fundamentals, and it’s only a matter of time before they normalize to below $60,” Ian Roper, an analyst at Macquarie Group Ltd., said in an email. “We’ve had a negative view on prices for a while but they’ve held up longer than we expected.” Continue Reading →

CNBC Transcript: Jean-Sebastien Jacques, CEO, Rio Tinto (March 19, 2017)

Following is the transcript of a CNBC interview with Jean-Sebastien Jacques, CEO, Rio Tinto. The interview was broadcast on CNBC on 20 March 2017. All references must be sourced to a “CNBC Interview”. Interviewed by Geoff Cutmore, Anchor, CNBC at China Development Forum 2017.

Geoff Cutmore: So what we have now is the new set of growth targets for the Chinese economy, are you concerned or otherwise, that we still continue to see the glide path, still lower growth rates for China?

Jean-Sebastien Jacques: So let’s be clear, if you ask me if I’m concerned about China the answer is absolutely no for 2017. Remember we are supplying lots of products to China: copper, iron ore for steel, bauxite for aluminum, even diamonds, so we have a pretty good understanding of what the situation is in China. And today when I look at our order books, I’ve got no concerns whatsoever.

GC: What’s your broad sense of the demand picture then for full year 2017 and running into 2018? Continue Reading →

Top Iron Miners’ Cash Juggernaut Set to Survive Price Crash – by David Stringer (Bloomberg News – March 13, 2017)

The world’s biggest iron ore miners will be able to withstand the expected plunge in prices because their race to cut production costs has dramatically lowered the industry’s margin pressure point, allowing them to keep fueling a cash juggernaut that’s revived the mining sector.

More than 90 percent of producers in the global seaborne market can generate profits at a benchmark price of $60 a metric ton, Adrian Doyle, a Sydney-based senior consultant at researcher CRU Group, said by phone. That compares with about 65 percent of suppliers able to avoid losses at the same price point three years ago, he said.

“There have been fantastic cost reductions in a lot of instances,” while producers have also been boosted by lower oil prices, Doyle said. “If we were thinking of a pressure point where we’d start to see a bit of stretching in the industry, previously it would’ve been around $60 a ton, now it’s closer to $50 a ton-to-$45 a ton to stress test everyone but the majors.” Continue Reading →

Sam Walsh befuddled by Rio Tinto wealth ‘deferral’ – by Matthew Stevens (Australian Financial Review – March 6 2017)

Every door at Rio Tinto used to be wide open to Sam Walsh. But when the former Rio Tinto chief executive and his lawyers checked in with his erstwhile dominion to find out what the board found so disturbing in the erupting Simandou email scandal, he was told: “Read the newspapers, Sam.”

Walsh is said to be befuddled and insulted by the lack of professional courtesy offered by his former employer through their time of shared crisis and thoroughly mystified by the logic that had the Rio Tinto board force a “deed of deferral” on the present and future benefits Walsh is owed by the company.

The deed, revealed in Rio Tinto’s annual report, puts a two-step delay on Walsh owning the full weight of deferred shares awarded under short and long-term incentive plans that would be worth about $20 million at current prices. Continue Reading →

Mining Companies Are Back in the Black – by Scott Patterson and Rhiannon Hoyle (Wall Street Journal – February 21, 2017)

Coming out of a punishing downturn, executives are still cautious despite the return to profitability

The world’s biggest miners are profit machines again, cashing in on soaring commodity prices and rewarding investors who stuck with them through a brutal downturn.

BHP Billiton Ltd., the world’s largest miner by market value, said Tuesday it earned a net profit of $3.2 billion for the second half of 2016 after posting a $5.7 billion loss in the year-ago period. Anglo American PLC, the fifth-largest mining company, reported a net profit of $1.6 billion for all of 2016, a dramatic rebound from 2015, when it lost $5.6 billion.

The solid performance builds on strong results posted by British-Australian miner Rio Tinto PLC, which two weeks ago said it earned $4.6 billion in 2016 following a loss of $866 million in the prior year. Switzerland-based Glencore PLC is scheduled to release 2016 results on Thursday, with analysts widely predicting a return to profit. Continue Reading →

Mining giants ride copper’s price wave – by Scott Patterson (Dow Jones/The Australian – February 20, 2017)

Copper bulls are looking smart — for now. Some of the world’s biggest mining companies, which have giant copper portfolios, are now poised to reap the rewards, with Anglo American, BHP Billiton and Glencore set to report full- or half-year earnings this week.

The industrial metal has surged more than 30 per cent in the past year, providing rocket fuel for companies that were staring into the abyss a year ago. Shares in Anglo and Glencore have more than tripled in the past 12 months. BHP, which has faced headwinds from a fatal tailings-dam disaster at one of its mining operations in Brazil, is up 62 per cent.

Rio Tinto, which is focusing more on its copper business, offered a preview of how miners’ fortunes have flipped to the upside when it reported earnings earlier this month. The Anglo-Australian mining giant said it returned to a profit in 2016 with $US4.62 billion in earnings, increased its dividend and announced a $US500 million share buyback. Continue Reading →

Iron ore rally fires up Rio Tinto’s commodity merry-go-round – by Clyde Russell (Reuters U.S. – February 15, 2017)

JOHANNESBURG Reuters) – Mining company super profits appear to be back on the agenda as earnings stand to be turbo-charged by higher-than-expected prices for iron ore and other metals, while volumes are also likely to be strong.

It’s the stuff of dreams for mining company bosses: high prices and strong production that can be sold into a rally.

Iron ore has been the standout so far in 2017, and as the steel-making ingredient surged to its highest level in three year above $90 a ton, so too will profits at the three major producers, Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton.

Investors have already had a little taste of what may come, with Rio raising its dividend above market expectations when it released results last week. Continue Reading →

Surging Iron Ore Won’t ‘Fall Off a Cliff,’ Says Rio Tinto – by David Stringer and Haidi Lun (Bloomberg News – Februay 13, 2017)

Iron ore will defy forecasts for a dramatic price collapse as China’s economy remains strong and the top buyer boosts demand for higher-quality imports, according to Rio Tinto Group, the second-largest exporter.

“I wouldn’t necessarily say that it’s going to fall off a cliff,” Chief Financial Officer Chris Lynch said Monday in an interview with Bloomberg Television’s Daybreak Australia. “I guess the key issue is that we have to be robust in case the price goes up, down or sideways, and that’s what we set out our business to do.”

Global exporters are benefiting as mills in China, the world’s top steelmaker, increasingly prefer higher-quality raw materials to raise efficiency and cut pollution, according to Lynch. Continue Reading →

[Australia mining] Brendon Grylls accuses BHP, Rio-backed mining lobby of ‘wet lettuce’ fight – by Julie-anne Sprague (Australian Financial Review – February 8, 2017)

WA Nationals leader Brendon Grylls has urged BHP Billiton and Rio Tinto to spend millions of dollars on a campaign against Prime Minister Malcolm Turnbull’s reluctance to change the GST distribution system.

Mr Grylls accused mining lobby group Chamber of Minerals and Energy (CME) of a ‘wet lettuce’ fight with the Federal government during a live ABC radio debate in Perth on Wednesday.

CME chief executive Reg Howard-Smith said the lobby group had spent $2 million fighting Mr Grylls’s proposal, which combined funds from BHP, Rio, the Minerals Council of Australia and the CME. Mr Howard-Smith agreed the GST distribution system was unfair and that the lobby group had publicly declared Western Australia needed a fairer deal. Continue Reading →

Rio Tinto Rewards Investors as Profit Rebounds on Iron Rally – by Jesse Riseborough and Perry Williams (Bloomberg News – February 8, 2017)

Rio Tinto Group will pay a much higher dividend than expected and buy back $500 million of shares after the world’s second-biggest mining company reported the first gain in annual profit since 2013.

Higher iron ore prices boosted underlying profit 12 percent to $5.1 billion in 2016, London-based Rio said on Wednesday. That beat the $4.75 billion average estimate of analysts compiled by Bloomberg.

The dividend fell 21 percent to 170 cents a share, reflecting a new policy aligning the payout to earnings. Still, that exceeded the average estimate of 136 cents in the Bloomberg survey and the company’s minimum payout of 110 cents. Rio will purchase U.K.-listed shares throughout this year. Continue Reading →

Rio Tinto gives shelved diamond mine to central Indian state – by Cecilia Jamasmie ( – February 7, 2017)

Mining giant Rio Tinto (ASX, LON:RIO) said Tuesday it’s handing its shelved and massive Bunder diamond deposit in India to the state government of Madhya Pradesh, where the mine is located.

The company, which spent almost $120 million on the asset discovered in 2004, had planned to invest an extra $500 million to develop it. But Rio decided last year to mothball it due to regulatory hurdles, local opposition and weak diamond prices.

The Madhya Pradesh government will take ownership of the assets, including all the land, plant, equipment, and diamond samples recovered during exploration, Rio said in the statement. Continue Reading →

China’s Australia Coal Deal Snags Access to Energy-Hungry World – by Ben Sharples (Bloomberg News – January 25, 2017)

China isn’t just buying Australia’s coal assets, it’s also expanding access to the limited infrastructure needed to ship it globally.

Yancoal Australia Ltd.’s $2.45 billion purchase of the biggest slice of Rio Tinto Group’s coal operations will double the Chinese-owned miner’s output in the country. The deal also includes a 36.5 percent stake in Port Waratah Coal Services Ltd., the owner of two terminals at the port of Newcastle, Australia’s main conduit for thermal coal. The amount Yancoal will be permitted to ship will double.

“The Rio operations are long life, so they have plenty of reserves, and Yancoal will benefit from increased port capacity at Newcastle,” said Matthew Boyle, a Sydney-based industry consultant at CRU Group. “This is a definite game changer and Yancoal suddenly becomes a rather large player.” Continue Reading →

Rio Executive Firing Linked to Internal CEO Feud, Says Conde – by Jesse Riseborough and Franz Wild (Bloomberg News – January 20, 2017)

The President of Guinea is disputing public statements made by Rio Tinto Group regarding the firing of a senior executive for a $10.5 million payment made to the president’s friend Francois de Combret.

President Alpha Conde said the firing of Alan Davies, who headed Rio’s $20 billion Simandou iron ore project in Guinea, was the result of an internal feud. Rio has said it was because of improper payments to de Combret in 2011 for assisting the company’s negotiations with Conde on the mine.

Davies had been seen as a challenger to Jean Sebastien Jacques prior to the Frenchman becoming chief executive officer in July. “In reality, it was a settling of scores because the new CEO wanted to get rid of Alan Davies,” the 78-year-old Conde, who’s been president since 2010, said in an interview on Wednesday in Davos, Switzerland. Continue Reading →

Rio Ends Quest for China Mine Riches With Biggest Holder – by David Stringer (Bloomberg News – January 18, 2017)

Rio Tinto Group and its largest shareholder Aluminum Corp. of China have terminated their joint venture established to find copper deposits, as global mining companies tighten exploration budgets.

Chinalco Rio Tinto Exploration Co., a joint venture between Rio and Aluminum Corp., also known as Chinalco, was launched in 2011 to seek out deposits in China and had plans to expand its search to coal and potash.

“The joint venture exploration company has ceased operation and entered the liquidation phase,” Chinalco said in an e-mailed statement. Continue Reading →

Rio Tinto lifts iron ore shipments 3pc, but copper falls short – by Daniel Palmer and Matt Chambers (The Australian – January 17, 2017)

Rio Tinto has missed 2016 copper production guidance because of problems at Indonesian, US and Mongolian mines, resulting in an uncertain production outlook for this year, just as prices of the industrial metal show signs of recovery.

In its fourth quarter production report released this morning, the mining giant (RIO) logged full-year mined copper production of 523,300 tonnes, up four per cent from 2015 but missing already reduced guidance of between 535,000 and 565,000 tonnes. In October, guidance was cut from 545,000 to 595,000 tonnes.

Iron ore production from Rio’s big Pilbara-region mines in Western Australia performed in line with guidance and expectations. Continue Reading →