RIO Rio Tinto Limited

Rio Tinto PLC on Tuesday downgraded its refined-copper production guidance for 2022 and said it expects Australian iron-ore shipments to be at the low end of an earlier forecast range. Here are some remarks from its third-quarter operational report.

On its iron-ore shipments:

"We produced 84.3 million [metric tons] in the third quarter, 1% higher than the corresponding period of 2021, and 7% higher than the prior quarter with continued commissioning and ramp-up of Gudai-Darri and Robe Valley. We produced less SP10 this quarter compared to the prior quarter.

"Third quarter shipments of 82.9 million tons were 1% lower than the third quarter of 2021, and 4% higher than the prior quarter despite two unplanned rail outages on the Yandicoogina and Gudai-Darri lines. The investigation into the Gudai-Darri derailment is ongoing. There were some encouraging performance trends in the third quarter in relation to mine material movements, build-up of run of mine ore stocks and continued ramp up of new projects."

On the iron-ore market:

"Iron ore Platts CFR prices trended down from $120/dmt [dry ton] to $96/dmt during the third quarter as the loss of confidence in China's property market and Covid-related disruptions to construction activity curtailed China's steel production and consumption by circa 9% August year to date versus the same period of 2021. The major iron ore producers shipped the same aggregate volume during the first three quarters of 2022 as they did over the same period of 2021. With supply from other producers down 17% year to date--due to, among other factors, the war in Ukraine and export taxes in India--total seaborne supply contracted 4.5% during August year-to-date versus the same period of 2021."

On its aluminum production:

"Aluminum production of 0.8 million tons was 2% lower than the third quarter of 2021, and 4% higher than the prior quarter as the Kitimat smelter continues to ramp up and Boyne smelter cell recovery efforts progress as expected. The Kitimat pot restarts are progressing but structural issues with the alumina conveyor system caused disruptions through the quarter slowing the rate of pot restarts. We continue to focus on full recovery during the course of 2023."

On the aluminum market:

"The LME aluminium price extended further losses, dropping 20% over the quarter, averaging $2,354/ton. Additional smelter curtailments in Europe and China on high power prices and low hydropower generation, respectively, were insufficient to offset the weak macro environment. Aluminium demand has deteriorated, especially in Europe, which placed downward pressure on prices. Shipments in the U.S. and Canada have been resilient and there are signs of improvement in demand in China.

On copper production:

"Mined copper production [at Kennecott] was 19% higher than the third quarter of 2021, and 50% higher than the prior quarter with significant progress into higher grades following the transition to the south wall (averaging 0.54% in the first nine months), higher recoveries and strong mill performance driving higher ore milled.

"Refined copper production guidance has been reduced to 190,000 to 220,000 tons (previously 230,000 to 290,000 tons), given further downside risk associated with Kennecott's smelter and refinery performance, until we undertake the largest rebuild in nine years which is planned for the second quarter of 2023.

"Mined copper production [at Escondida] was 10% higher than the third quarter of 2021 mainly due to expected higher concentrator feed grade and higher recoverable copper in ore stacked for leaching mainly due to higher material stacked in both oxide and sulphide leach."

On the copper market:

"The copper LME price dropped 7% over the third quarter to $3.47/pound. A strong U.S. dollar, tightening monetary policy and challenging economic outlook weighed on market sentiment. Nevertheless, prices have been partly supported by supply concerns and low exchange inventories, which currently remain at multi-year lows."

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

October 17, 2022 19:19 ET (23:19 GMT)

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