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Q1 Production: Rio Tinto (ASX:RIO) share price drops

The Rio Tinto Limited (ASX: RIO) share price has dropped after revealing its 2021 first quarter production numbers.

Rio Tinto’s 2021 first quarter

The iron ore mining giant revealed that it saw Pilbara iron ore shipments of 77.8 million tonnes, which was 7% higher than the first quarter of 2020. However, that was down 12% on the fourth quarter of 2020.

There was above average wet weather in the mines through February and fixed plant reliability. Labour resource availability and weather challenges disrupted maintenance. Tropical Cyclone Seroja impacted mine and port operations in April.

Iron ore production was down 2% compared to the prior corresponding period, with production down 11% from the 2020 fourth quarter.

Full iron ore guidance remains unchanged.

Bauxite production was down 2% year on year to 13.6 million tonnes due to wet weather. Aluminum production of 0.8 million tonnes was 3% higher year on year, Mined copper production was down 9% year to year to 120.5kt.

Titanium dioxide slag production of 279kt was down 5% due to a planned furnace rebuild at the Rio Tinto Fer et Titane (RTFT) metallurgical complex in Quebec.

Production of pellets and concentrate at Iron Ore Company of Canada was 8% lower than 2020 due to the impacts of weather, loading availability on mine feed and reduced concentrator mill availability.

Rio Tinto said steel prices in China finished the quarter at decade highs as construction activity and steel demand in the first quarter exceeded both 2020 and 2019.

Strong steel demand and margins, at their highest since 2018, have lifted with demand for higher quality iron ore products.

Management comments

The new CEO spoke about what he has been focusing his time on with ESG issues. Rio Tinto CEO Jakob Stausholm said:

It has been a period of deep reflection for the company, and I have personally spent a significant amount of time listening, learning and taking actions, in particular to better manage Traditional Owner partnerships and cultural heritage. 

I have appointed a new leadership team and the transition is progressing well. We have set out clear priorities to develop a stronger Rio Tinto. Our focus is to become the best operator, strive for impeccable ESG credentials, excel in development and secure a strong social licence. This ambition will enable us to continue to deliver superior returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society.”

Summary thoughts about the Rio Tinto share price

Rio Tinto is benefiting strongly from the high iron ore prices. It’s helping generate strong profit and excellent cashflow. The miner is using this money to pay big dividends and improve its balance sheet.

The Rio Tinto share price has done well, at around $120 it certainly isn’t cheap. It really depends how long iron ore prices stay where they are. Some say this could be the start of a ‘super cycle’ for commodities. But there’s also concern that Chinese demand could fall, particularly because of environmental reasons.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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