Rio Tinto 2015 Q4: Iron ore production up by 10%
Rio Tinto (ASX:RIO) increased iron ore production by 10 percent during the last quarter of 2015. The British-Australian mining giant posted solid fourth quarter production amid reports that the company will freeze pay of its employees.
For Q4 2015, global iron shipments were up by 11 percent at 91.3 million metric tons, while output rose to 10 percent at 87.2 million metric tons in December. Despite the company boasting meeting its target production, it still fell short of analyst expectations.
According to Bloomberg, iron ore production fell short of the 91 million metric tons median estimate by six analysts.
“In 2015, we delivered efficient production, meeting our targets across all of our major products, while rigorously controlling our cost base. We will continue to focus on disciplined management of costs and capital to maximise cash flow generation throughout 2016,” chief executive Sam Walsh said in a statement.
For the whole of 2015, global iron ore production went up 11 percent at 327.6 million Mt, while shipments also went up 11 percent at 336.6 million Mt. Rio Tinto is targeting 350 million Mt of iron ore production for 2016.
Increased production does not necessarily mean increased profit, though. Last week, Walsh reportedly told employees that the company will freeze salaries and limit travel expenditure for the year.
In an email sent to staff, and obtained by Bloomberg News, Walsh told employees that the move was necessary for the company to survive. As he explained, global growth is not enough to offset weak China growth. China is the biggest commodities consumer.
“The pressure this is placing on our industry is significant and it is a tough time across the sector,” he wrote. “It is important we recognise that the pressure isn’t going to let up. This situation is not temporary.”
The pay freeze will apply from the chief executive downward. The company refused to comment on the leaked email.
Rio Tinto closed at $38.83 on Tuesday’s trade on ASX.
