16 April 2009
Rio Tinto aluminum, iron output down
In a growing economy, companies need aluminum and steel, and in a down market production falls off. Rio Tinto Ltd. proved the latter is true, as its first-quarter aluminum output fell 6% and iron ore production fell 15% as the company struggled to balance supply with weak global demand.
On the positive front, Copper output rose 33%. Also, indicators show there may be a bit of a burst for iron ore in the second half of the year on the back of a recovery in China.
Alumina production fell 2% to 2.18 million tons and bauxite fell 19% to 6.97 million tons.
With a reduced supply, the thinking was maybe prices would go up, but that did not occur as prices continue to stay near the five-year lows as demand drops for the lightweight metal, used in everything from jets to beer cans.
Over the quarter, a steady performance at Rio’s Canadian smelters came in contrast to production cutbacks in operations in Europe and at a smelter in New Zealand, the company said.
As it seems with most companies, Rio Chief Executive Tom Albanese said the timing for any economic recovery remained unknown, though he held out hope China’s steel mills at least—big buyers of the company’s iron ore—could see improvements later this year.
That hope is what is boosting Rio’s plans to hike iron ore output to 200 million tons, from 175 million last year, Albanese said. The 31.6 million tons of output in the first quarter was flat from the previous quarter, after Rio cut iron ore output late last year in the face of falling demand.
“Global iron ore guidance for 2009 remains around 200 million tons, with an expected recovery in Chinese steel demand in the second half of 2009,” Albanese said.
For related information, go to www.isa.org/productivity.
Read questions answered by our experts or join the email list.
