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Rio Tinto releases 2Q21 production results

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Global Mining Review,

Rio Tinto has released its 2Q21 production results.

Rio Tinto Chief Executive, Jakob Stausholm, said: “The global economy, in particular China, recovered strongly and we are intensely focused on servicing our customers with as much product as we can. However, we faced some challenges in the first half notably at our Pilbara operations, which were impacted by replacement mine tie-ins and materially higher rainfall. Heightened COVID-19 constraints, which resulted in numerous travel restrictions, added further pressure on the business and limited our ability to access additional people, particularly in Western Australia and Mongolia, in order to deliver operational improvements or maintenance initiatives and accelerate projects.

“Safety is our first priority and our performance in this area remains robust in challenging conditions. However, as identified shortly after my appointment, operationally we are not where we want to be. Our first half performance has reaffirmed my belief that we have identified the right priorities to strengthen the business: to become the best operator, strive for impeccable ESG credentials, excel in development and secure a strong social licence. We have made initial progress against our priorities, but a large volume of work remains to make Rio Tinto even stronger, so we can continue to deliver superior returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society.”

2Q21 operational update

  • A colleague, Nico Swart, was tragically killed in a shooting incident whilst driving to work at Richards Bay Minerals (RBM) in South Africa on 24 May. The company’s sympathies are with Nico's family and is offering ongoing support to his family, friends and colleagues.
  • The company continues to prioritise the safety of our people and communities as some regions experience a resurgence of COVID-19. It has exceeded 30 months without a fatality on site but the all injury frequency rate (AIFR) of 0.39 has seen a slight increase vs 2Q20 (0.37), and prior quarter (0.35), which underlines that there is no room for complacency.
  • Rio Tinto expects iron ore shipments to be at the low end of the guidance range which remains subject to COVID-19 disruptions, tie-in and ramp up of brownfield replacement mines and management of cultural heritage. Mined copper and bauxite production is expected to be at the low end of the guidance range. Full year titanium dioxide slag production guidance has been removed as a result of risks around the timing of resumption of operations at RBM in South Africa, due to an escalation in the security situation. The company is working with the local and federal governments and police to ensure we can safely resume operations.
  • Pilbara iron ore production of 75.9 million t (100% basis) was 9% lower than 2Q20 due to above average rainfall in the West Pilbara, shutdowns to enable replacement mines to be tied in, processing plant availability, and cultural heritage management. Shipments of 76.3 million t (100% basis) were 12% lower than 2Q20 with some additional drawdown of inventories. Ongoing COVID-19 restrictions and a tight labour market have further impacted Rio Tinto’s ability to access experienced contractors and particular skill sets.
  • Bauxite production of 13.7 million t was 6% lower than 2Q20 due to ongoing system instability following severe wet weather in Eastern Australia in the first quarter.
  • Aluminium production of 0.8 million t was 4% higher than 2Q20, underpinned by the ISAL smelter in Iceland and the Becancour smelter in Quebec operating at full capacity, and the Kitimat smelter in British Columbia nearing completion of its pot relining cycle.
  • Mined copper production of 115 500 t was 13% lower 2Q020, with lower recoveries and throughput at Escondida as a result of the prolonged impact of COVID-19, and a planned relocation of the in-pit crusher at Kennecott in April. On 31 May, an anticipated slope failure occurred in the south east wall of the Bingham Canyon pit at Kennecott. There were no injuries or damage to equipment as the slide was accurately predicted by the company’s geotechnical experts. Mining in the affected area restarted progressively in June. No ore has been sterilised and it is expected to recover the material from the slide which is largely copper bearing ore. Mining rates will however be slower due to the size distribution of the material, and therefore some high-grade production scheduled for late 2021 will be deferred to 2022.
  • Titanium dioxide slag production of 298 000 t was 14% higher than 2Q20 due to consistent production at the Fer et Titane (RTFT) metallurgical complex in Quebec. Following weeks of violent disruptions, the RBM operations have been significantly hampered. As a result, the company declared force majeure, with all operations curtailed.
  • Production of pellets and concentrate at Iron Ore Company of Canada (IOC) was 2% lower than 2Q20 due to labour and equipment availability issues impacting product feed. Force majeure declared in April following the fire at the port has been lifted.
  • On 17 June, Peter Cunningham was appointed as Chief Financial Officer with immediate effect. Peter also joined the Rio Tinto Board as an executive director at the same time. On 7 July, the appointment of Isabelle Deschamps was announced, who will join on 25 October as Chief Legal Officer and External Affairs, succeeding Barbara Levi.
  • On 4 June, the company announced the appointment of Ben Wyatt as a Non-Executive Director of the Rio Tinto Board. Wyatt, an Australian citizen, and former Treasurer and Aboriginal Affairs Minister in the Western Australian Government, will join the Board on 1 September 2021.
  • In 2Q21, Rio Tinto entered into four partnerships to progress its work to decarbonise its value chain. These include one with the Australian Renewable Energy Agency (ARENA) to study whether hydrogen can replace natural gas in alumina refineries to reduce emissions, and one with POSCO to jointly explore, develop and demonstrate technologies to transition to a low-carbon emission steel value chain.

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