| Rio Tinto: In-Line Aluminum, More-than-Expected Bauxite Production | |
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Analyzing Rio Tinto’s 3Q15 Production: A Solid Set of Numbers (Continued from Prior Part) Aluminum production
Rio Tinto (RIO) and Alcan combined in 2007 to form Rio Tinto Alcan, a global leader in the aluminum industry. Its fully integrated facilities include high-quality bauxite mines, large-scale alumina refineries, and some of the world’s lowest-cost aluminum smelters. A sustained rise or fall in aluminum shipments is a significant indicator that affects the stock value of aluminum producers such as Alcoa (AA) and Century Aluminum (CENX).
Alcoa currently forms 2.6% of the Materials Select Sector SPDR ETF (XLB) and 0.79% of the iShares North American Natural Resources ETF (IGE).
Strong production
- After setting a new first-half production record at 21.2 million tons, Rio Tinto’s bauxite production sustained its strong performance in the third quarter with an increase of 4% year-over-year (or YoY). This was mainly due to strong performance at Weipa and the ramp-up of Gove.
- Alumina production was also up 4% YoY in the nine months ending September 30. This was mainly driven by improved productivity at Queensland Alumina and Yarwun.
- Aluminum’s production for 9M15 was marginally higher year-over-year. Record production at eight smelters offset lower production at Kitimat, as Rio Tinto commissioned a modernized smelter. Kitimat will ramp up towards its nameplate capacity of 420 thousand tons, expected to be completed by early 2016. This would be a 48% increase over its previous nameplate capacity.
Guidance almost the same
- RIO kept its guidance unchanged at 43 million tons for bauxite, 8 million tons for alumina, and 3.3 million tons of aluminum for 2015.
- However, it reduced its guidance for its expected share of alumina production from 8 million tons to 7.8 million tons.
- Going forward, the expansion of the Kitimat smelter’s ramp-up towards nameplate capacity of 420 million tons per year of production should help the company’s aluminum volumes.
The company is also focusing on value-added products in aluminum, which should reduce the need for some of its customers to re-melt the material. This change could lead to premium prices.
Alcoa (AA), which released its 3Q15 results on October 8, 2015, now expects the aluminum industry to record a surplus of 551,000 metric tons in 2015. That’s 210,000 metric tons less than its earlier forecast. This could be a positive catalyst for aluminum producers going forward.
For more on aluminum, visit Market Realist’s Aluminum page.
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Companhia Vale Do Rio Doce
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PRODUCER |
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CODE : RIO |
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ISIN : US7672041008 |
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ProfileMarket
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Asset profileContact Cpy |
Vale do Rio is a copper producing company based in . Vale do Rio produces copper, aluminum, bauxite, iron, manganese, nickel and silica in Brazil, develops coal and copper in Australia and in Brazil, and holds various exploration projects in Brazil and in Peru. Its main assets in production are ALUNORTE, URUCUM MINE, MILTONIA 3, MORRO DA MINA, TAQUARI - VASSOURAS, SOSSEGO MINE, CAPAO XAVIER, CARAJAS, ANDRADE, SAMARCO, CONCEIÇÃO, MINAS DO MIEO, AGUA LIMPIA / CURURU, GONGO SOCO, BRUCUTU, BAU, FABRICA NOVA, FAZENDAO, TIMBOPEDA, CORREGO DO FEIJAO, SEGREDO/JOAO PEREIRA, PICO/SAPECADO/GALINHEIRO, VARGEM GRANDE COMPLEX TAMANDUA, CAPITAO DO MATO, ABOBORAS, PARAOPEBA COMPLEX JANGADA, SERRA NORTE - N4W, SERRA NORTE - N4E, SERRA NORTE - N5-W, SERRA NORTE - N5E, SERRA NORTE - N5E-N, SERRA NORTE - N5S, SERRA LESTE, MILTONIA 5 and MRN (BAUXITE MINING) in Brazil, its main assets in development are BELVEDERE in Australia and SALOBO PROJECT in Brazil and its main exploration properties are SALOBO, MAR AZUL MINE, ONÇA PUMA, PROJECT 118 and VERMELHO in Brazil and CORDILLERA DE LAS MINAS in Peru. |