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First quarter operations review - riotinto.com

First quarter operations review Page 1 of 29 Rio Tinto releases First quarter production results 18 April 2018 Rio Tinto chief executive J-S Jacques said We delivered a solid operational performance across most commodities in the First quarter of 2018. Our world-class Pilbara iron ore assets continue to demonstrate flexibility and the benefits of increased productivity, and production at our bauxite and copper assets was also higher. We announced $5 billion of divestments in the quarter , highlighting our ongoing drive to strengthen the portfolio and raise return on assets. By continuing to advance our mine-to-market productivity programme, whilst maintaining our focus on the disciplined allocation of cash, we will continue to deliver superior returns to our shareholders.

First quarter operations review Page 1 of 29 Rio Tinto releases first quarter production results 18 April 2018 Rio Tinto chief executive J-S Jacques said “We delivered a solid operational performance across most

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Transcription of First quarter operations review - riotinto.com

1 First quarter operations review Page 1 of 29 Rio Tinto releases First quarter production results 18 April 2018 Rio Tinto chief executive J-S Jacques said We delivered a solid operational performance across most commodities in the First quarter of 2018. Our world-class Pilbara iron ore assets continue to demonstrate flexibility and the benefits of increased productivity, and production at our bauxite and copper assets was also higher. We announced $5 billion of divestments in the quarter , highlighting our ongoing drive to strengthen the portfolio and raise return on assets. By continuing to advance our mine-to-market productivity programme, whilst maintaining our focus on the disciplined allocation of cash, we will continue to deliver superior returns to our shareholders.

2 Q1 2018 vs Q1 2017 vs Q4 2017 Pilbara iron ore shipments (100% basis) Mt +5% -11% Pilbara iron ore production (100% basis) Mt +8% -5% Bauxite kt 12,653 +12% -8% Aluminium kt 846 -5% -5% Mined copper kt +65% -6% Hard coking coal kt 1,102 -30% -53% Titanium dioxide slag kt 294 -12% -14% IOC iron ore pellets and concentrate Mt -8% -13% Key points Pilbara iron ore shipments of million tonnes (100 per cent basis) in the First quarter were five per cent higher than the First quarter of 2017, benefitting from productivity improvements and fewer weather disruptions. Bauxite production of million tonnes was 12 per cent higher than the corresponding quarter of 2017, due to continued operational improvements.

3 Third party shipments increased by 19 per cent to million tonnes due to firm demand and higher port availability. Aluminium production of million tonnes was five per cent lower than the First quarter of 2017 due primarily to disruptions at the Becancour smelter in Canada. Mined copper production of thousand tonnes was 65 per cent higher than the First quarter of 2017, as output recovered at Escondida following a labour union strike in the First half of last year. Titanium dioxide slag production was 12 per cent lower than the First quarter of 2017 due to operational and labour disruptions at Richards Bay Minerals. Guidance has accordingly been revised to to million tonnes (previously to million tonnes).

4 Hard coking coal production of million tonnes was 30 per cent lower than the First quarter of 2017 due primarily to the longwall changeover and maintenance works at Kestrel. The major growth projects remain on track. The Silvergrass iron ore mine continues to ramp up, Amrun is on schedule for First bauxite shipment in the First half of 2019 and construction of the First drawbell at Oyu Tolgoi Underground is expected in mid-2020. Total divestments announced in 2018 total $5 billion, subject to completion conditions, including: o Binding offers for the Aluminium Dunkerque smelter in France for $500 million and the ISAL aluminium smelter in Iceland for $345 million. The sales are expected to complete in the second quarter of 2018.

5 O Binding offers for the group s remaining coal assets, including the Hail Creek and Kestrel mines in Queensland and the Winchester South and Valeria development projects, for total consideration of $ billion. The sales are expected to complete principally in the second half of 2018. All figures in this report are unaudited. All currency figures in this report are US dollars, and comments refer to Rio Tinto s share of production , unless otherwise stated. To allow production numbers to be compared on a like-for-like basis, production from asset divestments completed in 2017 is excluded from Rio Tinto share of production data but assets sold in 2018 remain in 2 of 29 IRON ORE Rio Tinto share of production (million tonnes) Q1 2018 vs Q1 2017 vs Q4 2017 Pilbara Blend Lump +8% -2% Pilbara Blend Fines +10% -4% Robe Valley Lump +9% -4% Robe Valley Fines +31% +5% Yandicoogina Fines (HIY) +2% -13% Total Pilbara production Total Pilbara production (100% basis) Pilbara operations Pilbara operations produced million tonnes (Rio Tinto share million tonnes)

6 In the First quarter of 2018, eight per cent higher than the same quarter of 2017. Sales of million tonnes (Rio Tinto share million tonnes) were five per cent higher than the same period of last year. production benefitted from fewer weather disruptions than the First quarter of 2017, along with the ramp up of Silvergrass and the ongoing implementation of productivity improvements across the integrated system. Rail productivity continues to improve, with million tonnes railed in the First quarter . Sales were million tonnes below production due to disruptions at the ports resulting from Tropical Cyclone Marcus in March. Approximately 18 per cent of sales in the quarter were priced by reference to the prior quarter s average index lagged by one month.

7 The remainder was sold either on current quarter average, current month average or on the spot market. Approximately 34 per cent of sales in the quarter were made free on board (FOB), with the remainder sold including freight. Pilbara projects The automation of the Pilbara train system (AutoHaulTM) continues to advance, with approximately 65 per cent of trains at the end of the quarter in autonomous mode with a driver on board for supervision and more than three million kilometres now completed in this mode of operation. The project continues to progress with the Regulator approval process and is on schedule to be completed by the end of 2018. The Koodaideri feasibility study is on track for completion in 2018.

8 2018 guidance Rio Tinto s Pilbara shipments in 2018 are still expected to be between 330 and 340 million tonnes (100 per cent basis). This is subject to market conditions and any weather constraints. Page 3 of 29 ALUMINIUM Rio Tinto share of production ( 000 tonnes) Q1 2018 vs Q1 2017 vs Q4 2017 Rio Tinto Aluminium Bauxite 12,653 +12% -8% Alumina 1,990 -3% -4% Aluminium 846 -5% -5% Bauxite Bauxite production of million tonnes was 12 per cent higher than the First quarter of 2017, primarily driven by operational improvements. Gove production was notably 31 per cent higher due to the debottlenecking of the materials handling system, whilst stronger production was also achieved at Weipa (eight per cent higher) and Sangaredi (five per cent higher).

9 production was lower than the fourth quarter of 2017 due to seasonal wet weather. million tonnes was shipped to third parties in the First quarter of 2018, 19 per cent higher than the First quarter of 2017 due to firm demand and higher port availability. Amrun The Amrun project is advancing to plan and has completed the installation of beneficiation modules and the process water dam. The project remains on schedule for First shipment in the First half of 2019. Alumina Alumina production for the quarter was three per cent lower than the corresponding period in 2017 due primarily to maintenance at QAL. Aluminium Quarterly aluminium production was five per cent lower than the corresponding period last year.

10 This was due largely to an ongoing lock-out at the Becancour smelter, which began on 11 January 2018, as well as a power incident at the Dunkerque smelter which occurred on 6 February 2018. On 10 January 2018, Rio Tinto announced it had received a binding offer for the sale of the Aluminium Dunkerque smelter in France for $500 million, subject to final adjustments. The sale is expected to complete in the second quarter of 2018, subject to satisfactory consultations with key stakeholders and completion of other conditions. On 26 February 2018, Rio Tinto announced it had received a binding offer of $345 million for the sale of its ISAL smelter in Iceland, its per cent share in the Aluchemie anode plant in the Netherlands and its 50 per cent share in the Aluminium fluoride plant in Sweden.


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