Photo by: Bloomberg
MELBOURNE – Global miner Rio Tinto on Wednesday flagged possible changes to its 2018 aluminium output following US sanctions on its Russian partner Rusal earlier this month.
Rio, which reported a 5% rise in first-quarter iron ore shipments in the March quarter, has declared force majeure on some customer contracts after US sanctions on UC Rusal, the world's second biggest aluminum producer.
Rio kept its forecast for aluminium production steady in its first quarter production report.
"Adjustments may ... be made as a consequence of the US sanctions," it said.
Rio has said it is reviewing Rusal's 20% stake in its Queensland Alumina refinery, Rusal's supply and offtake arrangements, bauxite sales to Rusal's refinery in Ireland and offtake contracts for alumina.
The miner could still be a big beneficiary of the US sanctions on Rusal as it is a major supplier of aluminum to the US from its Canadian smelters, while aluminium prices have surged by more than 20% since the sanctions were announced.
Rio said its 2018 aluminium output forecast of 3.5-million to 3.7-million tonnes would also face adjustments following the sale of its Icelandic and French aluminium smelters.
In iron ore, the world's second-biggest supplier of the steel-making ingredient, shipped 80.3-million tonnes in the quarter ended March 31, up from 76.7-million tonnes last year.
Rio said March shipments rose due to fewer weather disruptions and productivity improvements, although shipments fell 11% on the previous quarter.
"We delivered a solid operational performance across most commodities in the first quarter of 2018," Rio Tinto CEO Jean-Sebastien Jacques said in a statement.
"Our world-class Pilbara iron ore assets continue to demonstrate flexibility and the benefits of increased productivity, and production at our bauxite and copper assets was also higher."
The miner maintained its iron ore production guidance for this year of 330-million to 340-million tonnes, and kepts its copper guidance steady.
For the March quarter, aluminum production fell 5% from a year ago to 846 000 t, while copper output jumped 65% to 139 300 t.
The global miner exited the coal mining business in the March quarter with the sale of its stake in the Kestrel mine in Central Queensland.
Rio's Australian shares rose 1.6% in morning trading, outpacing a 0.3% rise in the broader market