![]() ![]() While this has long been the case, the lingering question – made more pressing by China’s plans to turn West Africa into a major iron ore hub – is whether Stausholm can finally start changing the balance.Īluminum earnings more than doubled during the period to $US1.9 billion thanks to a post-COVID rebound in prices. The other big challenge highlighted on Wednesday also centres on iron ore, and Rio’s reliance on it: 82 per cent of Rio’s underlying earnings came from this division. “It’s going to be gradual improvement, half-year on half-year on half-year.” ![]() Mine planning has to be done with a very long term view, not with a view to what you can produce in a quarter,” Stausholm says. “It’s a very difficult moment in our history to make those changes. He admits changes to planning have been made difficult by COVID restrictions and particularly the new heritage obligations forced on Rio by the Juukan disaster, but is confident Rio can get back on track over the longer term. But he won’t chase short-term fixes, particularly when it comes to the mine plan. Stausholm, who to his eternal credit refused to hide behind Rio’s monster profit, bluntly says the miner’s operational performance is not up to scratch. But this stuff is now being sold as a standalone product and shipments tripled during the June quarter due to what Rio again referred to on Wednesday as “mine plan issues”. Perhaps the most obvious outworking of this problem visible on Wednesday was shipments of Rio’s lower quality SP-10 iron ore product, which it previously used only to blend with its best quality ore. Whatever the reason for these original issues, they have been tragically exacerbated by Rio’s destruction of sacred sites last year at Juukan Gorge. They started in June 2019, when Rio shocked the market by referring vaguely to mine planning issues – still not fully explained – at its Brockman Hub in the Pilbara. For a miner that prides itself in thinking in decades, these issues are unacceptable. Then there is the long-term problem with Rio’s mine plan in the Pilbara. It’s all understandable, but Rio’s mantle as the iron ore sector’s lowest cost operator is well and truly gone. Shipments were down 12 per cent in the June quarter year on year, with Rio laying some of the blame on wet weather, tight labour markets and COVID restrictions.Ĭosts are rising too, due to labour shortages, rising diesel costs, foreign exchange pressures and other costs associated with COVID. In the short term, Rio faces an uphill battle to hit its production guidance for calendar 2021 of 325 million tonnes to 340 million tonnes. The first and most pressing is ironically enough in the company’s iron ore division, which despite the huge earnings is frankly in a bit of a mess. Rio investors may bask in the reflected glory of the iron ore price today and may still for some time to come, but chief executive Jakob Stausholm is candid that the miner still faces a range of challenges, two of which stood out in Wednesday’s interim earnings. Rio Tinto’s chief executive Jakob Stausholm isn’t hiding behind the good results. And the Rio share price, which sits near record highs having surged 63 per cent from the market’s nadir last March. The staggering 124 per cent jump in earnings from its iron ore business, which at $US10.2 billion is yet another record. A monster $US5.61 per share dividend, easily the miner’s biggest interim payout ever. There’s the $US12.2 billon ($16.6 billion) in underlying earnings, the biggest six-month profit in Rio’s history. It would be all too easy for investors to be dazzled by the jewels contained in Rio Tinto’s stunning interim earnings report for the six months ended June 30. ![]()
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