Rio Q2 iron ore output up 12%, flags cost pressures

Global miner Rio Tinto on Thursday posted a 12% rise in second-quarter iron ore production versus a year ago and said its Australian coal operations were recovering from flood-related disruptions but also warned of cost pressures.

"Operations largely recovered from the severe weather impacts earlier this year, although some port and rail constraints remained," Rio Tinto Chief Executive Tom Albanese said in a statement.

Rio Tinto, the world's second-biggest producer of iron ore after Vale of Brazil, forecast 2011 iron ore production of more than 240 million tonnes and said a multi-year expansion plan was on track.

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While the second quarter was also characterised by continued strong prices for most metals and minerals, Albanese warned of "worsening adverse exchange rates and some input cost pressures."

Global iron ore production of 49 million tonnes attributable to Rio Tinto, or 62 million tonnes on a 100% basis, was up 12% on the second quarter of 2010 and up 17% on the first quarter of 2011, the company said.

That was also slightly higher than most analysts' forecasts.

Still, first-half iron ore shipments of 110 million tonnes, also on a 100% basis, were 6 million tonnes lower than 2010's first half, following several cyclones, widespread flooding and a subsequent train derailment in the first quarter of 2011 in Western Australia.

Rio Tinto operates some of its iron ore mines on its own and some in joint ventures.

Also, mined copper was down 24% on the second quarter of 2010, primarily reflecting lower grades at its 30%-owned Escondida mine and wholly-owned Kennecott Utah Copper division.

Rio Tinto shares were trading down 0.64% at Australian 80.44 dollar at 0530 GMT, broadly in line with declines in the wider market.