Rio Tinto's 2Q Steady As She Goes

CEO Tom Albanese's outlook statement sounds generally positive, with an element of a bet each way

Mark Taylor 27 July, 2010 | 9:38AM
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Rio Tinto recorded second-quarter production gains in most major commodity groups compared with the first quarter. This was generally close to, if marginally shy of, expectations. In particular, coal showed strong gains from the maintenance and weather-affected first quarter. Coking coal extraction from Hail Creek mine in Australia came from a higher-yielding seam, and heavy equipment additions helped. Improved plant reliability at Kestrel boosted production rates there. Other Australian coal operations enjoyed improvement across the board, including first output from the new Clermont mine.

Copper and uranium fell considerably short of the mark. Kennecott Utah Copper suffered lower grades and a 19-day smelter shutdown. This was only partially offset by higher output from Escondida and lesser mines. Well-flagged scheduling issues crimped uranium production from ERA's Ranger mine, with rain exacerbating. Iron ore and aluminium generally close to levels anticipated.

We retain our positive view, with no change to our valuation. The shares are yet to fully recover from the Australian government's petroleum resources rent tax fiasco, and opportunity remains.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rio Tinto PLC4,592.50 GBP0.00Rating

About Author

Mark Taylor  is an equity analyst at Morningstar.