Rio Tinto releases second quarter production results
16 July 2024
Rio Tinto Chief Executive Jakob Stausholm said: “Our operational performance continues to progress. While there are still significant improvements ahead, we are beginning to see a step-change in production, including from our Queensland bauxite business following the roll-out of the Safe Production System.
“We are growing with discipline in the materials the world needs for the energy transition. Construction of the Simandou high grade iron ore project in Guinea is advancing at pace, the ramp up of the Oyu Tolgoi underground is on track and we are set to achieve first production from the Rincon starter plant by the end of the year.
“We continue to prioritise the decarbonisation of our business, announcing the installation of carbon free aluminium smelting cells using ELYSIS technology at our Arvida smelter in Quebec and an investment in a R&D facility to test our low-carbon ironmaking process, BioIron, in Western Australia. We also signed 20-year electricity arrangements backed by renewable electricity to secure the future of the Tiwai Point aluminium smelter in New Zealand.
“As we progress against our four objectives and strategy, we have a clear long-term pathway to profitable growth and continued attractive shareholder returns.”
| Production* | Q22024 | vs Q2 2023 | vs Q1 2024 | H12024 | vs H12023 | |
| Pilbara iron ore shipments (100% basis) | Mt | 80.3 | +2% | +3% | 158.3 | -2% |
| Pilbara iron ore production (100% basis) | Mt | 79.5 | -2% | +2% | 157.4 | -2% |
| Bauxite | Mt | 14.7 | +9% | +10% | 28.1 | +10% |
| Aluminium** | kt | 824 | +1% | 0% | 1,650 | +3% |
| Mined copper (consolidated basis) | kt | 171 | +18% | +10% | 327 | +13% |
| Titanium dioxide slag | kt | 238 | -22% | -6% | 492 | -16% |
| IOC*** iron ore pellets and concentrate | Mt | 2.2 | +6% | -16% | 4.8 | +5% |
* Rio Tinto share unless otherwise stated
** Includes primary aluminium only
*** Iron Ore Company of Canada
Q2 2024 operational highlights and other key announcements
• Our all injury frequency rate for the second quarter was 0.32, a decrease from both the first quarter of this year (0.37) and the same period in 2023 (0.38). We continue to prioritise the health, safety and well-being of our people and the communities where we operate. During the quarter, this included undertaking mid-year safety maturity assessments at our assets, helping us to continuously evaluate and evolve our safety approach across the organisation. The investigation by the authorities into the tragic plane crash at Diavik in January 2024 is ongoing.
• In the Pilbara, we produced 79.5 million tonnes (Rio Tinto share 67.5 million tonnes) in the second quarter, 2% lower than the corresponding period of 2023. Productivity gains offset ore depletion, however production and shipping in the quarter were impacted by a train collision in mid-May, which resulted in around six days of lost rail capacity and full stockpiles at some mines. Shipments of 80.3 million tonnes (Rio Tinto share 66.2 million tonnes) were 2% higher than the second quarter of 2023, with the draw down of port stocks.
• Bauxite production of 14.7 million tonnes was 9% higher than the second quarter of 2023. The increase reflects implementation of the Safe Production System (SPS), especially at Weipa where we achieved higher plant utilisation and feed rates. As a consequence, our Group full year bauxite production guidance is expected to be around the top end of our 53 to 56 million tonne range.
• Alumina production of 1.7 million tonnes was 10% lower than the second quarter of 2023 due to the continuing impacts to our Gladstone operations from the breakage of the third-party operated Queensland Gas Pipeline in March. As a result, we have reduced our Group full year alumina production guidance to 7.0 to 7.3 million tonnes (previously 7.6 to 7.9 million tonnes). We expect gas supplies from the pipeline to return to normal levels by the end of 2024.
• Aluminium production of 0.8 million tonnes was 1% higher than the second quarter of 2023 with our smelters continuing to demonstrate stable performance during the period.
• On 31 May, we announced that New Zealand Aluminium Smelters (NZAS) has signed 20-year electricity arrangements that secure the future of the Tiwai Point aluminium smelter to continue competitively producing high-purity, low carbon metal, backed by renewable electricity. In a separate transaction, we entered into an agreement to acquire Sumitomo Chemical Company Limited’s (SCC’s) 20.64% interest in NZAS for an undisclosed price. On completion of the transaction, NZAS will be 100% owned by Rio Tinto.
• Mined copper production of 171 thousand tonnes (consolidated basis) was 18% higher than the second quarter of 2023.
◦ Kennecott was 30% higher than the second quarter of 2023 following a conveyor outage in the prior period. However, production was 1% lower than the previous quarter following changes to the mine plan to manage geotechnical risk in our mining area. These changes delayed access to pit ore and resulted in additional lower grade stockpiled material being processed. We are currently reworking our mine plan and expect to provide a further update in our Third Quarter Operations Review. Our Group full year mined copper production guidance is therefore expected to be around the bottom end of the 660 to 720 thousand tonne range.
◦ Escondida was 12% higher than the second quarter of 2023 due to a 7% improvement in concentrator feed grade as mining continued into higher grade zones, together with 12% higher concentrator output.
◦ Oyu Tolgoi was 23% higher than the second quarter of 2023 as the ramp-up in underground production continued in line with our long term plan, delivering a copper head grade of 2.02% (vs 1.56% in the second quarter of 2023) for the underground and an overall copper head grade of 0.61% (vs 0.52%).
• Titanium dioxide slag production was 22% lower than the second quarter of 2023, primarily driven by weak market conditions. Whilst a furnace reconstruction is underway at our RTIT Quebec Operations, we continue to operate six out of nine furnaces in Quebec and three out of four at Richards Bay Minerals (RBM).
• IOC production was 6% higher than the second quarter of 2023 as production rates in the prior period were impacted by wildfires. However, production was 16% down quarter-on-quarter given lower output from the mine and an annual maintenance shut in June. Shipments were 7% lower than the second quarter of 2023 due to low portside inventories.
• In the second quarter, we continued the deployment of SPS, now reaching 26 sites. We deepened the maturity of SPS at existing sites during the quarter, with three additional sites setting new best demonstrated throughput rates (over a 90 day period). We are on track to deliver our targeted 5 million tonne production uplift at Pilbara Iron Ore in 2024.
• Subsequent to the end of the quarter, all conditions were satisfied for Rio Tinto’s investment to develop the Simandou high-grade iron ore deposit in Guinea. The transaction to enable co-development of the infrastructure is now unconditional and expected to close during the week of 15 July. Chalco Iron Ore Holdings Ltd (CIOH) has now paid its share of capital expenditures incurred or required by Simfer to progress critical works up to completion. A first payment of approximately $410 million, for expenditures until the end of 2023, was made on 28 June 2024, and a second payment of approximately $575 million, for 2024 expenditures, was made on 11 July 2024. These amounts settle all expenditures incurred to date.
• We saw a cash outflow of circa $0.7 billion from an increase in working capital in the first half of 2024. This reflected the draw down of royalties and taxes payable in the period as prices fell from late 2023, along with seasonal movements in amounts due to JV partners and employees.
All figures in this report are unaudited. All currency figures in this report are US dollars, and comments refer to Rio Tinto’s share of production, unless otherwise stated.
2024 guidance
| Rio Tinto production share, unless otherwise stated | 2023 Actuals | H1 2024Actuals | 2024Previous | 2024Current |
| Pilbara iron ore (shipments, 100% basis) (Mt) | 331.8 | 158.3 | 323 to 338 | Unchanged |
| Bauxite (Mt) | 54.6 | 28.1 | 53 to 56 | 53 to 561 |
| Alumina (Mt) | 7.5 | 3.5 | 7.6 to 7.9 | 7.0 to 7.3 |
| Aluminium (Mt) | 3.3 | 1.7 | 3.2 to 3.4 | Unchanged |
| Mined copper (consolidated basis) (kt) | 620 | 327 | 660 to 720 | 660 to 7202 |
| Refined copper (kt) | 175 | 125 | 230 to 260 | Unchanged |
| Titanium dioxide slag (Mt) | 1.1 | 0.5 | 0.9 to 1.1 | Unchanged |
| IOC3 iron ore pellets and concentrate (Mt) | 9.7 | 4.8 | 9.8 to 11.5 | Unchanged |
| Boric oxide equivalent (Mt) | 0.5 | 0.2 | ~0.5 | Unchanged |
1 Around the top end.
2 Around the bottom end.
3 Iron Ore Company of Canada continues to be reported at Rio Tinto share.
• Guidance for 2024 alumina production has been reduced to 7.0 to 7.3 million tonnes (previously 7.6 to 7.9 million tonnes), as our Gladstone operations continue to operate at reduced rates following the breakage of a third party gas pipeline in March. We expect gas supplies from the pipeline to return to normal levels by the end of 2024.
• Expectations for Pilbara iron ore shipments in 2024 remain at 323 to 338 million tonnes. SP10 levels are expected to remain elevated until replacement projects are delivered. This guidance remains subject to the timing of approvals for planned mining areas and heritage clearances.
• Iron ore shipments and bauxite production guidance remain subject to weather impacts.
Operating costs
• Guidance for 2024 Pilbara iron ore unit cash costs is unchanged at $21.75 to $23.50 per tonne (based on an average A$:US$ exchange rate of 0.66). Pilbara iron ore unit cash costs in the first half of 2024 are expected to be towards the top end of the full year guidance range, with shipments weighted to the second half.
• Guidance for 2024 copper C1 unit costs is unchanged at 140 to 160 US cents/lb.
Aluminium modelling
To assist with modelling of aluminium operating costs during a volatile price environment for raw materials, we provide the following breakdown and sensitivities for the alumina and aluminium metal segments (Primary Metal and Pacific Aluminium). This excludes the effect of intra and inter segment eliminations on group profit.
Alumina refining
| Production cash cost (%) | FY 23 | H1 24 |
| Bauxite | 31 | 32 |
| Conversion | 34 | 39 |
| Caustic | 22 | 17 |
| Energy | 13 | 12 |
| Total | 100 | 100 |
| Input costs (nominal) | H1 23Index price | H2 23Index price | H1 24Index price | FY 24Annual cost sensitivity impact on underlying EBITDA |
| Caustic soda1 ($/t) | 424 | 369 | 376 | $11m per $10/t |
| Natural gas2 ($/mmbtu) | 2.54 | 2.79 | 2.21 | $4m per $0.10/GJ |
| Brent oil ($/bbl) | 79.7 | 85.5 | 84 | $2m per $10/bbl |
1North East Asia FOB | 2Henry Hub
Aluminium smelting
| Production cash cost (%) | FY 23 | HY 24 |
| Alumina | 38 | 41 |
| Power | 18 | 19 |
| Conversion | 21 | 22 |
| Carbon | 21 | 16 |
| Materials | 2 | 2 |
| Total | 100 | 100 |
| Input costs (nominal) | H1 23Index price | H2 23Index price | H1 24Index price | FY 24Annual cost sensitivity impact on underlying EBITDA |
| Alumina1 ($/t) | 352 | 335 | 400 | $65m per $10/t |
| Petroleum coke2 ($/t) | 631 | 491 | 394 | $11m per $10/t |
| Coal tar pitch3 ($/t) | 1,386 | 1,130 | 958 | $3m per $10/t |
1Australia FOB | 2US Gulf FOB | 3North America FOB
Investments, growth and development projects
• Pre-tax and pre-divestment expenditure on exploration and evaluation charged to the income statement in 2024 was $487 million, compared with $392 million in 2023, on the same basis (excluding Simandou spend, which was $318 million in the first half of 2023). Approximately 24% of the spend was by central exploration, 36% by minerals (with the majority focusing on lithium), 27% by copper, 12% by iron ore and 1% by aluminium. In 2024, all qualifying expenditure relating to Simandou is being capitalised.
Pilbara projects
• Construction of our Western Range mine is now 70% complete, with the development of the initial mining area completed during the quarter. We continue to focus on construction of the greenfield crushing and screening plant, and Paraburdoo plant tie-in, with first ore from that new system on plan for 2025.
• We continue to advance our next tranche of Pilbara mine replacement studies including Hope Downs 1 (Hope Downs 2 and Bedded Hilltop), Brockman 4 (Brockman Syncline 1), Greater Nammuldi and West Angelas projects. Early works have commenced at Hope Downs 1. Project timelines remain subject to timing of approvals and heritage clearances with the Greater Nammuldi project starting to diverge from the original development schedule.
• The Rhodes Ridge pre-feasibility study (PFS) continues to progress with good engagement with Traditional Owners and government. The PFS, which is targeting an initial capacity of up to 40 million tonnes per year, subject to relevant approvals, is expected to be completed in 2025. First ore is expected by the end of the decade.
• The Coastal Water desalination project received State Agreement approval in May 2024 allowing for commencement of early works. The $395 million plant will provide water to our port operations in Dampier. At full capacity, it will produce approximately 4GL/year to reduce draw from the Bungaroo aquifer to sustainable levels.
Oyu Tolgoi underground project
• The sinking of ventilation Shafts 3 and 4 was completed in April following the breakthrough to surface. Both shafts remain on track to be commissioned in the second half of 2024.
• Construction works for the conveyor to surface continued to plan and were 97% complete at the end of the quarter. Commissioning remains on track for the second half of 2024.
• Construction works for the concentrator conversion remains on schedule. Commissioning is expected to be progressively completed from the fourth quarter of 2024 through to the second quarter of 2025.
• Construction of primary crusher 2 is progressing to plan and remains on track to be completed by the end of 2025.
Simandou iron ore project
• Subsequent to the end of the quarter, all conditions were satisfied for Rio Tinto’s investment to develop the Simandou high-grade iron ore deposit in Guinea. Our transaction to implement a joint venture to co-develop the rail and port infrastructure with Winning Consortium Simandou (WCS)1 is now unconditional and expected to close during the week of 15 July.
• The Simfer mine2 is on track to deliver first production in 2025, ramping up over 30 months to an annualised capacity of 60 million tonnes per year3 (27 million tonnes per year Rio Tinto share).
• For the Simfer mine, work on support facilities, including camps, roads, and water and waste facilities is progressing well. With 8,500 workers on site for the Simfer mine and Simfer-managed scope of the co-developed infrastructure, the focus for the second half of the year is bulk earthworks, construction of the stockyard and rail loop, installation of early ore crushers and mobilisation of primary crusher construction teams.
• During the second quarter, for the Simfer infrastructure scope, we completed preparatory work on the bridge foundations which will be used to construct the railway spur. All infrastructure contracts have now been awarded. The focus for the Simfer scope of rail and port for the remainder of the year is to advance construction for the earthworks, tunnels, piers, culverts, transhipment vessel (TSV) wharf and port facilities.
• Biodiversity monitoring continues with several local communities, as do our rehabilitation efforts with 7,000 trees propagated in the Canga nursery. Our community commitments continue, and include two completed programs on education and land use, in addition to ten ongoing projects to promote social, infrastructure and economic development.
Other key projects and exploration and evaluation
• At Complexe Jonquière in Quebec, Canada, AP60 expansion construction activities progressed, with the first prefabricated steel structures delivered to site. Once completed, the project will add 96 new AP60 pots, increasing capacity by approximately 160,000 tonnes of primary aluminium per year by the end of 2026. This new capacity, in addition to 30,000 tonnes of new recycling capacity at Arvida expected to open in the fourth quarter of 2025, will offset the 170,000 tonnes of capacity lost through the gradual closure of potrooms at the Arvida smelter from 2024.
• At Kennecott, first production from the Lower Commercial Skarn (LCS) area was achieved in June 2024, marking the mine’s return to underground production after more than four decades. The LCS is expected to deliver about 30,000 tonnes of mined copper through to 2027 alongside open cut operations. Activities continued on the North Rim Skarn (NRS) underground development and infrastructure. Production from the NRS is forecast to commence around mid-year 2025 with a production target of approximately 250,000 tonnes through to 20334.
• At the Resolution Copper project in Arizona, the Ninth Circuit Court of Appeals denied Apache Stronghold’s request to further hear their case to stop the land exchange between Resolution Copper and the federal government. It is anticipated that Apache Stronghold will file a petition this fall for the case to be heard by the U.S. Supreme Court. We continue to progress the Final Environmental Impact Statement (FEIS) with the United States Forest Service (USFS), but they have yet to advise on the date of re-publication. We also advanced partnership discussions with federally-recognised Native American Tribes who are part of the formal consultation process. While there is significant local support for the project, we respect the views of groups who oppose it and will continue our efforts to address and mitigate concerns.
• Rio Tinto continues to work with the Traditional Owners to progress the Winu copper-gold project, which remains subject to all of the required approvals. Drilling, studies and fieldwork to advance the key environmental permitting and Project Agreement negotiations with Nyangumarta and the Martu remain our priority.
• Nuton, Rio Tinto’s copper heap leaching technology venture, continues to develop its path towards deployment, with nine partnerships in four countries: United States, Chile, Peru and Argentina. In May, Excelsior announced the execution of an agreement with Nuton to build an industrial scale demonstration heap that is expected to produce first Nuton copper in the first half of 2025.
• The Constitutional Court of Serbia has issued a decision that states the 2022 decree to abolish the Jadar project spatial plan was unconstitutional and illegal. We welcome this decision and continue to believe that the Jadar project has the potential to be a world-class lithium-borates asset that could act as a catalyst for the development of other industries and thousands of jobs for the current and future generations in Serbia. We are focused on consultation with all key stakeholders, including providing comprehensive factual information about the project. To support a public dialogue, we recently released the draft Environmental Impact Assessment studies which provide insights into the project’s potential environmental impacts and the proposed mitigation actions. Independent Serbian and international experts have confirmed the Jadar project can be implemented safely in line with the highest environmental standards.
• At the Rincon lithium project in Argentina, development of the three thousand tonne per annum lithium carbonate starter plant continues to progress to plan with civil concrete work completed and all steel, cable and piping on site, and being progressively installed. An additional 400-bed camp facility has also been constructed, bringing the total number of new beds on site to 900. Commissioning planning is advancing and we continue to expect first production from the starter plant by the end of 2024. We expect to complete the feasibility study for the full-scale operation in the third quarter of 2024. We continue to engage with communities, the province of Salta and the Government of Argentina to ensure an open and transparent dialogue with stakeholders about the works underway.