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Rio Tinto 1H14 Output Rises, Iron Ore Production Hits Record

Zacks Equity Research

Mining giant Rio Tinto plc (RIO) recorded strong production volumes for most of its products in the first half of 2014. While the production of mined copper, hard coking coal, semi-soft and thermal coal and iron ore, along with iron ore shipments increased, bauxite and titanium dioxide feedstock declined.

In the first half of 2014, Rio Tinto’s iron ore production rose 10% year over year to 109.9 million tons. The increase was primarily attributable to enhanced operations in the Pilbara plant, which attained an improved capacity of 290 million tons per annum in May. Also, expansion planned to 360 million tons per annum is on schedule and expected to consummate in first half of 2015. Iron ore shipments in 2014 are estimated at 300 million tons globally.

Production of copper and gold contained in concentrates improved in the reported half year, which indicates a recovery from the 2013 pit wall slide suffered in Kennecott Utah copper mine. Oyu Tolgoi and Turquoise Hill Resources also reported improved year over year production. The company expanded its share of mined copper production to approximately 585,000 tons from 570,000 tons, and refined copper production to 300,000 tons from a previous figure of 260,000 tons.

Bauxite production in the first half of 2014 decreased 2% year over year due to reduced alumina production at Gove.

Rio Tinto is expected to release first-half 2014 results on Aug 7. Such healthy production volumes indicate strong results.

With a market capitalization of $104.2 billion, Rio Tinto holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Hi-Crush Partners LP (HCLP), Dominion Diamond Corporation (DDC) and North American Palladium Ltd. (PAL). While Hi-Crush Partners sports a Zacks Rank #1 (Strong Buy), Dominion Diamond and North American Palladium hold a Zacks Rank #2 (Buy).

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