Rio Tinto has released its iron ore production results for 3Q17.
Pilbara operations produced 241.9 million t (Rio Tinto share 198.4 million t) in the first nine months of 2017, 1% lower than the same period of 2016, mainly due to weather disruptions in the first half of the year.
3Q17 production of 85 million t (Rio Tinto share 69.7 million t) was 2% higher than 3Q16 and 6% higher than the previous quarter, reflecting productivity enhancement projects across most sites.
Year-to-date sales of 240.2 million t (Rio Tinto share 197.2 million t) were in line with the same period of 2016. Strong third quarter sales of 85.8 million t (Rio Tinto share 70.0 million t) were assisted by improved rail capacity and performance. This was 6% higher than the same period of last year, which was impacted by shiploader maintenance, and 11% higher than the previous quarter.
Approximately 18% of sales in the quarter were priced with reference to the previous quarter’s average index lagged by one month. The remainder was sold either on current quarter average, current month average or on the spot market.
Approximately 65% of sales in the quarter were made on a cost and freight (CFR) basis, with the remainder sold free on board (FOB).
Pilbara projects
Silvergrass mine was officially opened on 30 August this year by the Premier of Western Australia. Commissioning of the conveyor system will commence in October and remains on target for completion in the fourth quarter of this year. Silvergrass will ramp up to capacity in 2018.
The automation of the Pilbara train system (AutoHaul™) is continuing to progress well, with the successful completion of the first autonomous train, without onboard supervision, on the mainline between Tom Price and Paraburdoo (~100 km). More than 50% of all train kilometres are now completed in autonomous mode with drivers on-board for supervision. Operational improvements from AutoHaul™ are already being realised including reduced variability and increased speed across the network, helping to reduce average cycle times. The project is on schedule to be completed by the end of 2018.
2017 guidance
Rio Tinto’s expected Pilbara shipments in 2017, subject to weather, remain unchanged at around 330 million t on a 100% basis.
Rio Tinto Chief Executive J-S Jacques said: “The business performed very well in the September quarter, with a strong quarterly production performance and a wave of productivity improvements embedded through our operations. In particular, we are making good progress with further improvements to our world-class Pilbara iron ore business, including the opening of the Silvergrass mine and the implementation of AutoHaul™. We continue to shape our asset portfolio and announced $2.5 billion of additional returns to shareholders from the proceeds of the Coal & Allied sale, demonstrating the robustness of our strategy and ability to invest in high-value growth whilst returning excess cash to shareholders. We have announced over $8 billion of cash returns in 2017. Our relentless focus on cash generation and disciplined capital allocation will continue to deliver superior returns for our shareholders.”