Wednesday, April 13, 2011

Rio (RIO) Says Iron Ore, Coal Production Down in 1Q

Not unexpectedly, Rio Tinto (NYSE:RIO) announced coal and iron ore production in the first quarter fell as a result of the heavy rains which hampered mining in Australia. Also affected was uranium output.

Production of iron ore fell from 50.1 million tons the prior quarter to 41.9 million metric tons. Hard coking-coal production dropped to 1.6 million tons, a 29 percent decline.

Full year earnings for Rio and major competitor BHP Billiton (NYSE:BHP) are expected to come under some pressure from the slowdown.

Evens so, Rio estimates it'll produce about 191 million tons of iron ore in 2011, up from the 184 million tons produced in 2010.

Paul Galloway, a Sanford C. Bernstein Ltd. analyst, wrote today in a note to clients, “Given this relatively robust full year production guidance, we view the substantial miss in iron ore production as a largely one-off occurrence and would expect to see improvement in the short-term. The overall impact on full-year 2011 earnings estimates in the market may be smaller than might initially be expected.”

Chief Executive Officer Tom Albanese said concerning production, “Our Australian coal, iron ore, uranium and alumina operations were affected by the extreme weather in the first quarter. Most are recovering and are benefiting from continued strong prices.”

Rio was trading in New York at $71.22, falling $0.91, or 1.26 percent, as of 2:15 PM EDT.

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