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Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF)'s Pilbara iron ore unit posted its strongest first-half production since 2018, beating consensus estimates alongside stronger shipment volumes, as the miner reiterated full-year guidance across all segments.
Second-quarter production beat expectations in both Pilbara output and shipment volumes, while the rest of Rio's major operating assets came in line with consensus.
Jefferies reiterated a Hold rating on Rio, citing relative valuation and a preference for miners with more direct copper leverage.
"While mostly an uneventful report from Rio, the quarter-over-quarter rebound in volumes at certain assets in Q2 is encouraging," Jefferies analysts wrote.
Cash generation in the first half was impacted by roughly $1.6 billion in tax and working capital outflows, the brokerage noted.
Pilbara shipment volumes rose 18% quarter-on-quarter as the company shipped excess production from the first quarter that had previously been constrained by extreme weather. Rio's SP10 classification volumes fell to 8% of sales, down from around 12% in recent quarters.
Rising diesel costs pushed first-half unit costs up about $0.8 per tonne year-on-year, though Jefferies noted full-year cash cost guidance in the Pilbara remains unchanged.
Iron Ore Company of Canada production and shipment volumes declined both sequentially and year-on-year due to lower concentrator feed and an ongoing ore dumper replacement project. Full-year guidance for the operation is subject to the impact of recent forest fires in Canada.
At Simandou, production increased quarter-on-quarter following a phased restart after a fatality in the first quarter. Ore is expected to be delivered through permanent crushing facilities in the second half.
Total copper production fell 7% both year-on-year and quarter-on-quarter, and was largely flat year-on-year for the first half. Refined production at Escondida rose significantly on Full Sal output, while concentrate production declined on anticipated lower ore grades.
At Kennecott, cathode production declined materially due to mine sequencing adjustments tied to maintenance plans. Oyu Tolgoi production was also lower quarter-on-quarter because of a planned shutdown, though grades came in higher than anticipated and guidance for the asset's ramp-up is unchanged.
Jefferies said unit cost guidance in copper was reduced to $0.30-$0.50 per pound from a prior range of $0.65-$0.75 per pound, reflecting higher gold prices and operational improvement initiatives.
Aluminum production was comparable to prior periods, as ramp-ups at select smelters offset the closure of the Arvida smelter. Alumina volumes were in line with expectations, while bauxite production rose 14% quarter-on-quarter following the impact of Cyclone Narelle in the first quarter.
Lithium carbonate equivalent volumes increased 15% sequentially, benefiting from reduced rainfall compared with first-quarter levels and from asset ramp-ups that remain on schedule.
