What Led to a Copper Production Beat for Rio Tinto in 1Q15?


Apr. 29 2015, Updated 10:06 a.m. ET

Copper production – a beat

Rio Tinto’s (RIO) copper production was 12% higher than 4Q14, driven by higher throughput at Kennecott and Escondida. Lower grades at Kennecott were the primary driver of the 9% decline compared to 1Q14. Now we’ll take a look at Rio’s copper production profile in detail.

  • Kennecott Utah Copper: Copper production for 1Q15 was significantly lower at 26.6 thousand tons compared to 1Q14. This was mainly due to lower grades and the current focus on deweighting and dewatering the east wall of Bingham Canyon. Quarter-over-quarter, however, copper production increased by 30% as production in 4Q14 was impacted by a scheduled smelter maintenance shutdown.
  • Escondida: Copper production at Escondida rebounded 35% compared to 1Q14 mainly due to higher grades. Copper production came in at 106.2 thousand tons. This, combined with higher throughput, contributed to a 20% increase in tonnage compared to the previous quarter.
  • Oyu Tolgoi/Turquoise Hill Resources: 1Q15 production was 33% lower than the previous quarter due to lower grades and a scheduled major maintenance shutdown.
  • Grasberg: Rio Tinto doesn’t expect 2015 production to exceed the metal attributable to Freeport-McMoRan Inc. (FCX). Thus, it expects its share of joint venture production to be zero during the year. Freeport is due to announce its first quarter results on April 23, 2015.

Teck Resources (TCK) reported its first quarter results on April 21. Southern Copper (SCCO) is expected to report in late April. FCX forms 3.8% of the SPDR Metals and Mining ETF (XME), which invests in the diversified metals and mining companies.

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Rio maintains previous guidance

As Rio previously announced, the company expects its share of mined copper production to be between 500 and 535 thousand tons and refined copper production to be between 190 and 220 thousand tons.


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