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Rio Tinto (RIO) Reports 4% Increase in Q4 Iron Ore Production
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Rio Tinto (RIO - Free Report) iron ore shipments in the fourth quarter of 2022 rose 4% year over year to 87.3 million tons (Mt) and iron ore production was up 6% to 89.5 Mt. This brought the iron ore shipments to 321.6 Mt in 2022, flat year over year. Iron production was 324 Mt, 1% higher than the prior year aided by performance improvement efforts and record second-half performance across the mine and rail system.
Bauxite production was reported at 54.6 million tons in 2022, 1% higher than in 2021 despite equipment reliability issues at Weipa and Gove in Australia. Aluminum output was down 4% year over year to 3.0 million tons in 2022 impacted by lower production at the Kitimat smelter in British Columbia, Canada and Boyne smelter in Queensland, Australia. The rate of pot restarts at Kitimat picked up in the fourth quarter and recovery efforts at Boyne smelter cell are underway. A full ramp-up is expected to be completed through 2023. All other aluminum smelters continued to deliver stable performances.
In 2022, mined copper production was 521 thousand tons, 6% higher than in 2021 aided by higher grades at Kennecott and Escondida, partly offset by lower grades and recoveries at Oyu Tolgoi as a result of planned mine sequencing. Unplanned maintenance at Kennecott in its anode furnaces in the fourth quarter of 2022 resulted in extended downtime.
Continued poor anode production is likely to result in weak cathode production in the first quarter of 2023. Refined copper production at Kennecott will continue to be challenged due to the smelter and refinery performance. This will eventually pick up as Rio is planning the largest rebuild in nine years which is scheduled for the second quarter of 2023 and is expected to take approximately three months.
Guidance for 2023
Rio Tinto expects Pilbara iron ore shipments (100% basis) in the range of 320 to 335 Mt in 2023. The mid-point of the range indicates a year-over-year rise of 2%. Bauxite production is expected to be within 54 Mt to 57 Mt compared with 55 Mt in 2022. RIO cautioned that the iron ore shipments and bauxite production guidance remains subject to weather and market conditions. Pilbara shipments guidance remains subject to progressing the ramp-up of shipments from new mines and management of cultural heritage.
Alumina production is anticipated between 7.7 Mt and 8.0 Mt, up from production of 7.5 Mt in 2022. Aluminum production is expected in the band of 3.1-3.3 Mt compared with 3.0 Mt of aluminum produced in 2022.
Mined copper production is forecasted in the range of 650 kt to 710 kt for 2023. The midpoint of the band indicates 31% year-on-year growth. The guidance factors in Rio Tinto’s acquisition of Turquoise Hill Resources (which was completed in December 2022) raised its interest in the Oyu Tolgoi mine from 33% to 66%.
Refined copper is predicted between 180 kt and 210 kt, which indicates a 7% year-on-year decline at the mid-point. Diamond production is projected to be 3-3.8 million carats, down from 4.7 million carats in 2022. Titanium dioxide slag production is expected to be between 1.1 Mt and 1.4 Mt in 2023.
Guidance for 2023 Pilbara iron ore unit cash costs is unchanged at $21.0 to $22.5 per ton and copper C1 unit costs are at $1.60 to $1.80 per pound.
Rio Tinto’s peer BHP Group (BHP - Free Report) expects to produce between 249 Mt and 260 Mt of iron ore in fiscal 2023. The midpoint of the range indicates a 1% increase from the prior-year’s output. The company expects copper production within 1,635-1,825 kt, suggesting 10% growth at the midpoint from the prior-year reported number.
Throughout 2022, iron ore prices were weighed down by persistent worries about weak demand from China due to recurring COVID lockdowns. Copper prices also declined on weak demand in China and uncertainties surrounding the global economy.
So far this year iron ore prices have gained, supported by the easing of the restrictions in China. Per the World Steel Association, steel demand will see a recovery of 1.0% in 2023 to reach 1,814.7 Mt. Infrastructure demand is expected to support steel demand. On the supply side, iron production is expected to fall due to weather-related disruptions in Brazil and potential cyclones in Australia. This will support iron ore prices.
Copper prices have also risen so far this year backed by supply concerns as solid demand is expected amid the energy-transition trend. Miners like RIO and BHP are expected to benefit from the pickup in iron ore and copper prices.
Price Performance
Image Source: Zacks Investment Research
In a year’s time, shares of Rio Tinto have gained 2.4%, against the industry’s 2.1% decline.
Some other top-ranked stocks from the basic materials space are CalMaine Foods, Inc. (CALM - Free Report) and Franco-Nevada Corporation (FNV - Free Report) . CALM currently sports a Zacks Rank #1 (Strong Buy) and FNV carries a Zacks Rank of 2.
The Zacks Consensus Estimate for CalMaine Foods’ fiscal 2023 earnings per share is pegged at $14.08, suggesting 417.7% growth from the year-ago reported figure. Earnings estimates have moved 73.8% north in the past 60 days. CALM has a trailing four-quarter earnings surprise of 15.3%, on average. Its shares have gained 31.6% in the past year.
The Zacks Consensus Estimate for Franco-Nevada’s 2022 earnings per share is pegged at $3.67, suggesting 4.3% growth from the year-ago reported figure. Earnings estimates have moved 4.2% north in the past 60 days. FNV has a trailing four-quarter earnings surprise of 1.3%, on average. Its shares have gained 12.8% in the past year.
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Rio Tinto (RIO) Reports 4% Increase in Q4 Iron Ore Production
Rio Tinto (RIO - Free Report) iron ore shipments in the fourth quarter of 2022 rose 4% year over year to 87.3 million tons (Mt) and iron ore production was up 6% to 89.5 Mt. This brought the iron ore shipments to 321.6 Mt in 2022, flat year over year. Iron production was 324 Mt, 1% higher than the prior year aided by performance improvement efforts and record second-half performance across the mine and rail system.
Bauxite production was reported at 54.6 million tons in 2022, 1% higher than in 2021 despite equipment reliability issues at Weipa and Gove in Australia. Aluminum output was down 4% year over year to 3.0 million tons in 2022 impacted by lower production at the Kitimat smelter in British Columbia, Canada and Boyne smelter in Queensland, Australia. The rate of pot restarts at Kitimat picked up in the fourth quarter and recovery efforts at Boyne smelter cell are underway. A full ramp-up is expected to be completed through 2023. All other aluminum smelters continued to deliver stable performances.
In 2022, mined copper production was 521 thousand tons, 6% higher than in 2021 aided by higher grades at Kennecott and Escondida, partly offset by lower grades and recoveries at Oyu Tolgoi as a result of planned mine sequencing. Unplanned maintenance at Kennecott in its anode furnaces in the fourth quarter of 2022 resulted in extended downtime.
Continued poor anode production is likely to result in weak cathode production in the first quarter of 2023. Refined copper production at Kennecott will continue to be challenged due to the smelter and refinery performance. This will eventually pick up as Rio is planning the largest rebuild in nine years which is scheduled for the second quarter of 2023 and is expected to take approximately three months.
Guidance for 2023
Rio Tinto expects Pilbara iron ore shipments (100% basis) in the range of 320 to 335 Mt in 2023. The mid-point of the range indicates a year-over-year rise of 2%. Bauxite production is expected to be within 54 Mt to 57 Mt compared with 55 Mt in 2022. RIO cautioned that the iron ore shipments and bauxite production guidance remains subject to weather and market conditions. Pilbara shipments guidance remains subject to progressing the ramp-up of shipments from new mines and management of cultural heritage.
Alumina production is anticipated between 7.7 Mt and 8.0 Mt, up from production of 7.5 Mt in 2022. Aluminum production is expected in the band of 3.1-3.3 Mt compared with 3.0 Mt of aluminum produced in 2022.
Mined copper production is forecasted in the range of 650 kt to 710 kt for 2023. The midpoint of the band indicates 31% year-on-year growth. The guidance factors in Rio Tinto’s acquisition of Turquoise Hill Resources (which was completed in December 2022) raised its interest in the Oyu Tolgoi mine from 33% to 66%.
Refined copper is predicted between 180 kt and 210 kt, which indicates a 7% year-on-year decline at the mid-point. Diamond production is projected to be 3-3.8 million carats, down from 4.7 million carats in 2022. Titanium dioxide slag production is expected to be between 1.1 Mt and 1.4 Mt in 2023.
Guidance for 2023 Pilbara iron ore unit cash costs is unchanged at $21.0 to $22.5 per ton and copper C1 unit costs are at $1.60 to $1.80 per pound.
Rio Tinto’s peer BHP Group (BHP - Free Report) expects to produce between 249 Mt and 260 Mt of iron ore in fiscal 2023. The midpoint of the range indicates a 1% increase from the prior-year’s output. The company expects copper production within 1,635-1,825 kt, suggesting 10% growth at the midpoint from the prior-year reported number.
Throughout 2022, iron ore prices were weighed down by persistent worries about weak demand from China due to recurring COVID lockdowns. Copper prices also declined on weak demand in China and uncertainties surrounding the global economy.
So far this year iron ore prices have gained, supported by the easing of the restrictions in China. Per the World Steel Association, steel demand will see a recovery of 1.0% in 2023 to reach 1,814.7 Mt. Infrastructure demand is expected to support steel demand. On the supply side, iron production is expected to fall due to weather-related disruptions in Brazil and potential cyclones in Australia. This will support iron ore prices.
Copper prices have also risen so far this year backed by supply concerns as solid demand is expected amid the energy-transition trend. Miners like RIO and BHP are expected to benefit from the pickup in iron ore and copper prices.
Price Performance
Image Source: Zacks Investment Research
In a year’s time, shares of Rio Tinto have gained 2.4%, against the industry’s 2.1% decline.
Zacks Rank & A Key Pick
Rio Tinto currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks from the basic materials space are CalMaine Foods, Inc. (CALM - Free Report) and Franco-Nevada Corporation (FNV - Free Report) . CALM currently sports a Zacks Rank #1 (Strong Buy) and FNV carries a Zacks Rank of 2.
The Zacks Consensus Estimate for CalMaine Foods’ fiscal 2023 earnings per share is pegged at $14.08, suggesting 417.7% growth from the year-ago reported figure. Earnings estimates have moved 73.8% north in the past 60 days. CALM has a trailing four-quarter earnings surprise of 15.3%, on average. Its shares have gained 31.6% in the past year.
The Zacks Consensus Estimate for Franco-Nevada’s 2022 earnings per share is pegged at $3.67, suggesting 4.3% growth from the year-ago reported figure. Earnings estimates have moved 4.2% north in the past 60 days. FNV has a trailing four-quarter earnings surprise of 1.3%, on average. Its shares have gained 12.8% in the past year.