Rio Tinto is going to cash in on the rising price of iron ore

Mining company Rio Tinto is set to cash in on the rising iron ore price despite a drop in production and shipments of key steel commodities in June.

Rio confirmed that the average price paid for its iron ore rose 35.6% in the first half of 2019. The higher price is expected to underline a better cash result for Rio when it releases its semi-annual results next month, which in Pivot could mean larger dividend payments to shareholders.

Iron ore is projected to generate about $ 12.1 billion ($ 17.2 billion) for the miner in the first half, up $ 2.4 billion from the first half of 2018.

However, in Rio de Janeiro, mining costs for iron ore are also increasing in 2019, with projected unit costs increasing to $ 14-15 per tonne from $ 13-14 per tonne.

Rio's latest quarterly production report confirmed that Pilbara iron ore shipments fell three percent this quarter compared to the same quarter last year, while total shipments in the first half (154.6 million tonnes) were down eight percent from the first. half of 2018. Iron ore production in the quarter decreased by seven percent compared to the June 2018 quarter.

A number of factors combined led to a decline in iron ore production and shipments in Rio de Janeiro in the first half of 2019. Cyclone Veronica, which struck western Australia in March, damaged the Cape Lambert A port facility in Rio de Janeiro, and a January fire at the facility also affected shipments.

And last month, Rio said it was experiencing difficulties with the operation of the mine, and for the second time lowered its 2019 iron ore production forecast to 320-330 million tonnes.

Despite operational challenges, the report confirmed the benefits of the rising global iron ore price. The average price mined by a miner for iron ore in the first half of 2019 was $ 78.5 ($ 111.84) per metric tonne, compared to $ 57.9 per metric tonne of crude oil in the first half. 2018.

Iron ore prices skyrocketed in 2019 after more than 240 people died in January following the destruction of Vale's tailings dam in Brazil and a series of cascading events were set in motion that are expected to reduce Vale's annual iron ore production by about 67 million tonnes. this year.

“In the first half, we saw a challenging operating performance for our portfolio and also invested in future growth,” said Jean-Sebastian Jacques, CEO of Rio.

“Despite the fact that we had problems with the operation and weather at our enterprises