Shares of Rio Tinto PLC (RIO, Financial) closed 1.76% lower at $60.43 on Tuesday after the company released production results for the second quarter.
Due to Cyclone Veronica’s impact on operations in Western Australia in March, bad weather conditions in Quebec in the first quarter and lower copper ore grades processed in Utah and Chile, Rio Tinto generated less iron ore shipments and copper production volumes.
The production of mined copper decreased 13% to 137,000 tons and shipments of iron ore produced from the asset located in the Pilbara region of Western Australia also fell 3% year over year to 85.4 million tons. Copper equivalent production for the first part of the year saw a 2% decline.
The company was also forced to lower 2019 guidance for Pilbara iron ore shipments and for the Canadian production of iron ore pellets and concentrate.
Rio Tinto guided for Pilbara iron ore shipments of 320 million to 330 million tons at a higher unit cost of $14 to $15 per tonne versus, down from the previous forecast of 333 million to 343 million tonnes at a unit cost of $13 to $14 per tonne. The miner forecasted Canadian iron ore production of 10.7 million to 11.3 million tonnes compared to the previous range of 11.3 million to 12.3 million tonnes.
In contrast, as a result of several operating improvements, titanium dioxide slag production grew 31% to 303,000 tons and bauxite production increased 1% to 13.4 million tonnes. Production of aluminium, at 0.8 million tonnes, was flat compared to the prior-year quarter.
Additionally, Rio Tinto said it will allocate approximately $509 million to the development of mineral projects located in South Africa and Arizona.
The stock had a market capitalization of about $102.77 billion at close on Tuesday, a price-book ratio of 2.38 versus the industry median of 1.46 and an enterprise value-Ebitda ratio of 5.90 compared to the industry median of 8.36.
Following a 10% rise for the 52 weeks through July 16, the share price is now slightly off the 100- and 50-day simple moving average lines and far above the 200-day line.
The 52-week range is $44.62 to $64.02.
Wall Street issued a hold recommendation rating for shares of Rio Tinto with an average target price of $80.01, reflecting 31.6% upside from Tuesday’s closing price.
Disclosure: I have no positions in any securities mentioned.
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