Rio Tinto Ltd (ASX: RIO) has released its second quarter report to the ASX, is the share price a buy?
Rio Tinto’s origins date back more than 145 years, but today it is one of world’s largest aluminium and iron ore producers, with much of its sales revenue coming from its operates in Western Australia. It also owns, fully or partly, mining projects for copper, diamonds, uranium and other minerals.
Is The Rio Tinto Share Price A Buy?
The giant miner reported that Pilbara iron ore shipments fell by 3% compared to a year ago to 85.4Mt in the June quarter. In the first half of 2019 iron ore shipments were down 8%. The company blamed the lower number in April on recovery works due to Tropical Cyclone Veronica.
Pilbara iron ore production was down 7% over the quarter and also down 8% over the half year. The reduction was caused by mine operational challenges.
The above issues reduced 2019 guidance for Pilbara shipments to between 320 million to 330 million from between 333 million to 343 million. Unit cost guidance has also been changed to $15 to $15 per tonne, instead of $13 to $14 per tonne.
Lower iron ore production was also the primary cause of a reduction in copper in the first half, although Bauxite production was 1% higher and aluminium production was flat.
Titanium dioxide slag production of 303 thousand tonnes was 31% higher than the second quarter of 2018, which was largely due to the operational challenges in 2018.
Rio Tinto CEO J-S Jacques said: “We saw a challenging operational performance across our portfolio in the first half, while also investing in future growth at Richards Bay Minerals and Resolution. Whilst we experienced operational and weather issues at our iron ore operations in Australia, pricing and market demand has remained robust.”
Is Rio Tinto A Buy?
The best time to buy resource business is when their commodity, such as iron ore, is at a low price in the cycle. I think the price is probably close to the peak, so I don’t think it’s the right time to buy Rio Tinto shares.
If you want blue chip exposure then I’d much rather invest in the reliable and proven businesses revealed in the free report below.
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