Global miner Rio Tinto has raised its production guidance for iron ore this year by between 5 and 7.5 per cent to 210 million to 215 million tonnes, after reporting a 12 per cent jump in third-quarter output.
Rio, the world's second-largest miner of the steel-making raw material, said it saw early signs of recovery among key customers with shipments to China maintained at a high level.
Rio's shares extended gains on the news, rising $1.06, or 1.7 per cent, to close at $63.25. Rival BHP Billiton, which is due to release its quarterly data next week, reversed losses to trade up 16 cents at $38.40. The broader market rose 0.9 per cent.
Rio produced 47.5 million tonnes of iron ore in the September quarter versus 42.4 million a year ago, according to its third quarter production report. Third quarter iron-ore production in the Pilbara region of Western Australia rose 18 per cent from a year earlier.
The increase in production of iron ore and the strength of demand from China suggests the miner has not been hampered by the arrest of four of its employees in Shanghai.
The company has stated repeatedly that it's been ''business as usual'' when asked about the detention of iron ore executive Stern Hu and his colleagues. Indeed, Rio says overall demand is set to
improve for key commodities such as iron ore and copper.
''We are seeing early signs of a recovery in some of our key markets, although we remain cautious about the near term outlook,'' company chief Tom Albanese said in a statement.
The company said it continues to make cost cuts and has made considerable progress in planned assets sell-offs to reduce debt.
Rebound forecast
Metals markets are widely forecast to continue to rebound from weak demand levels that swept through the sector last year when the world financial crisis decimated global industrial activity, prompting producers to step up output.
Rio was forced to accept price roll backs of 33-44 per cent and prospects of lower shipments this year as steel makers braced for a dramatic slowing in demand that now may prove short-lived.
Rio also said shipments of iron ore to all major markets were high during the quarter. It revealed iron ore sales, including those to China, were priced mostly at benchmark levels or provisional prices that were equivalent.
Analysts are tipping price increases of up to 15 per cent next year as steelmakers ramp up operations.
Coal, copper
In other minerals, coking coal production for the period was down 5 per cent from a year ago, while thermal coal output rose 12 per cent.
Hard coking coal production from its Queensland operations fell by 5 per cent in the quarter compared to a year earlier, to 2.08 million tonnes, but rose 9 per cent compared to the June quarter.
Other Australian coal production rose 12 per cent, year-on-year.
Mined copper production increased 24 per cent in the September quarter from a year earlier.
In 2009, Rio forecast its total share of mined and refined copper production to be 780,000 tonnes and 420,000 tonnes, respectively.
Copper production at its Kennecott Utah Copper project was up by 9 per cent, to 75,800 tonnes.
Production at Escondida, the world's largest copper mine, increased by 7 per cent.
Uranium, bauxite
Uranium production was 8 per cent up on the same period in 2008 to 3.8 million tonnes, with ERA increasing its output by 12 per cent due to improvements in plant utilisation.
Rio Tinto said its third-quarter bauxite and aluminium production fell in the quarter compared to a year earlier, but alumina production rose a little.
Bauxite was 16 per cent down due to production curtailments in response to falling demand and prices, while aluminium production dropped 4 per cent.
The level of alumina produced was up 1 per cent higher than the same period in 2008, after a temporary blockage in a pipeline affected production last year, and was three per cent higher than in the second quarter of this year.
Citi today upped its forecast 2010 copper price 16 per cent and aluminium 21 per cent.
Third-quarter diamond production dropped 54 per cent to 2.79 million carats, with big falls at both its Argyle mine in Western Australia and at the Diavik mine in Canada.
Rio Tinto said greenfield exploration budget in 2009 was cut by about 60 per cent, to $US100 million before tax and divestment proceeds.
Source: Melbourne Age
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