Rio Tinto ramps up gross sales beforehand of dividend day

Rio Tinto produced more iron ore than it promised and bought more than it produced in 2014, in a sign the miner is constructing a warfare chest for “materially increased” returns to shareholders subsequent month.

production numbers printed on Tuesday confirmed Rio’s flagship iron ore division had narrowly overwhelmed its goal of 295 million tonnes, producing 295.4 million tonnes for the whole yr.

but the miner bought even more. Rio shipped 302.6 million tonnes of iron ore all over the 12 months, after drawing down 7.2 million tonnes from its stockpiles in the Pilbara.

the additional sales are worth $489 million at as of late’s iron ore price, and illustrate Rio’s choice to make sure it will probably have the funds for to give shareholders a special spherical of dividends or share buybacks ahead of any future overtures from acquisitive suitor Glencore.

prices for iron ore and copper have slipped over latest months, which means the earnings from the additional sales can be a welcome boost prior to the entire 12 months financial results February 12.

In documents released to the ASX, Rio mentioned the extra gross sales of iron ore from the Pilbara have been “to facilitate an accelerated ramp up of the expanded port and rail services to 290 million tonnes per yr”.

The miner is continuing to increase its export capacity within the Pilbara, and vowed to provide 330 million tonnes of iron ore in 2015.

while the 2014 manufacturing and sales have been 11 per cent and 17 per cent better respectively than in 2013, both numbers were moderately under what analysts at a couple of investment banks had hoped for.

in spite of those expectations, Rio chief govt Sam Walsh stated the 2014 yr had been a “a success” one on the production aspect.

“Output is consistent with our objectives across all our major products,” he stated.

RBC Capital Markets analyst Chris Drew said there have been no big demons in the consequence, despite iron ore manufacturing being somewhat under analysts’ expectations.

“It looks as if a lovely steady form of end result from them,” Mr Drew said.

the upper sales of iron ore were not a massive surprise regardless of the depressed costs for iron ore, he said.

“taking into account the margin position it is a small booster for cash and we are on the lookout for that capital return at the (full 12 months) outcome, so it will help that equation.”

The benchmark iron ore value used to be $US68.09 a tonne on Tuesday morning, and u.s.a.believes the price will average about $US66 a tonne in 2015, neatly under the $US95.seventy one a tonne it averaged in 2014.

Rio beat its thermal coal production target via greater than  a million tonnes, delivering 25.1 million tonnes for the 12 months. Coking coal used to be additionally slightly higher than promised.

Mined copper used to be four per cent higher than 2013 but reasonably beneath steering at 603,000 tonnes.

it is tipped to be a complicated 12 months for the copper division, which will have some of its best mines, together with Escondida and Kennecott Utah, operating beneath full capability.

Rio beat its production steerage for the full 12 months in alumina, however manufacturing of bauxite and aluminium fell slightly wanting objectives as a result of complications with shutdowns and sales of underperforming property.

more importantly, the received price for aluminium was larger in 2014 at $2395 a tonne, compared to $2249 a tonne in 2013.

Rio’s production of titanium dioxide was once also beneath steerage.

lifestyles is way more difficult for fellow iron ore exporter Atlas Iron, which confirmed that its average bought value previously six months had failed to compare its costs of manufacturing.

The challenging market stipulations have pushed Atlas’s cash steadiness down from $389 million three hundred and sixty five days in the past to $169 million at December 31.