Rio Tinto, the world's second-biggest miner by market value, has announced a quarter-on-quarter increase in its production of various commodities, including iron ore and aluminum. The company reported a growth of just over 3% in its total copper-equivalent production in 2023 compared to the previous year.

Fourth-Quarter Production Highlights

In the fourth quarter, Rio Tinto produced a total of 87.5 million metric tons (73.8 million tons as Rio Tinto's share), which was 2% lower than the same period in 2022 but 5% higher than the previous quarter. Shipments for the quarter reached 86.3 million tons (73.3 million tons as Rio Tinto's share), showing a 1% decrease from the fourth quarter of 2022 but a 3% increase from the previous quarter. Notably, SP10 accounted for a larger proportion of shipments during the fourth quarter, reaching 20%.

For the whole year of 2023, shipments increased by 3% compared to 2022, making it the second-highest shipment year on record. This growth was supported by improved system performance, with an additional 5 million tonnes from the implementation of the Safe Production System and the ramp-up of Gudai-Darri to its full nameplate capacity of 43 million tons. These developments helped offset mine depletion.

During the reported quarter, iron ore prices experienced a significant rise of 17%. The average monthly price in the fourth quarter stood at $129/dry ton (Platts CFR 62% Fe index), which was 13% higher than the third quarter. Seaborne supply increased by approximately 1% quarter-on-quarter, with China witnessing a 3% growth in iron ore imports while steel demand stabilized in both developed and emerging regions. However, China's steel and pig iron production began to decelerate towards the end of December, despite elevated iron ore arrivals due to the typical seasonality observed in the fourth quarter. China's port inventories grew by approximately 6 million tons, reaching a total of 120 million tons by the end of the year.

Outlook for Aluminum Output

The report did not provide specific details regarding Rio Tinto's aluminum output.

Aluminum Production

During the fourth quarter of 2022, our aluminum production reached 0.8 million tons, representing an 8% increase compared to the previous quarter. We were able to achieve this growth by returning to full capacity at our Kitimat smelter and completing cell recovery efforts at Boyne during the prior period. Notably, all our other smelters demonstrated stable performance throughout the quarter.

In addition to primary production, we also saw significant output from Matalco in 2023, with the production of 582,000 tons of recycled aluminum products. Rio Tinto was responsible for marketing these products starting from December 1, 2023.

Aluminum Prices

During the quarter, the price of aluminum on the London Metal Exchange (LME) increased by 1%, while the average price rose by 2% from the third quarter, reaching $2,190 per ton. It is important to note that aluminum demand in North America and Europe remained weak, with the exception of the transport sector. Although primary production growth in China slowed due to winter disruptions in southern China, the market was supported by low global reported inventories.

Copper Output

Our mined copper production reached 620,000 tons on a consolidated basis in 2023, marking a 2% increase compared to the previous year. This growth can be attributed to the first sustainable production from Oyu Tolgoi underground in the first quarter and an increased ownership of Oyu Tolgoi throughout the entire year. Despite challenges following a conveyor failure at Kennecott in March, resulting in the concentrator not returning to full capacity until the third quarter, we were able to achieve higher copper output.

However, our refined copper production of 175,000 tons was 16% lower than in 2022. This decrease can be attributed to the extensive rebuild of the smelter and refinery at Kennecott, which took place in the second and third quarters. Nevertheless, with the successful completion of the smelter rebuild and the ongoing ramp-up process, we expect a return to stable production in the first quarter of 2024.

Copper Prices

Over the quarter, the LME copper price experienced a 3% increase. However, the average price of $3.70 per pound was 2% lower than that of the third quarter. The market balance was affected by major mine supply disruptions in Central and South America, as well as lower expectations for 2024 supply. Despite weaker demand from the construction sector, energy transition-related copper demand contributed to growth in 2023.

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