The result saw Rio hit the upper end of its revised 320 million to 330 million tonne iron ore export target for the year, a figure it was forced to downgrade because of bad weather and operational muddles.
After falling short of its original aim of 350 million tonnes in 2019, Rio has tempered its expectations for iron ore output in 2020, giving guidance of between 330 and 343 million tonnes for the year.
“Our guidance is framed by expectations of general stability in global GDP, tempered by negative risks, including geopolitical tensions and price volatility,” the company said.
Mr Jacques said bauxite production was 9 per cent higher than the previous year, underpinned by the company successfully ramping up its Amrun mine in Queensland.
Its 3.2 million tonnes of aluminium output was 2 per cent lower than in 2018 and copper production dropped 5 per cent compared to the same period.
“Lower copper grades at Kennecott [a huge facility in Utah] impacted the fourth quarter in particular: this is expected to persist until we access higher grader from the end of 2020,” he said.
Analysts at Morgan Stanley said Rio’s copper output was weaker than expected.
The company’s new guidance was likely to shave 2 per cent off its EBITDA forecast for the group, they said.
On the upside, elevated spot prices for iron ore prices could drive earnings upgrades and potentially increase the prospect of shareholder cash returns, the bank noted.
“Financial risks remain very low with $US4 billion net debt by the end of the year,” the analysts said.
Expenditure on exploration and evaluation of its pipeline of projects was up significantly at $624 million.
The approval of a pending milestone permit at its US Resolution Copper mine would increase spending on the facility. The company’s advanced Winu and Falcon projects in Australia and Canada are also expected to soak up cash.
Rio expects to produce between 55 to 58 million tonnes of bauxite and 7.8 to 8.2 million tonnes of alumina over the year.
Production at its fabled Argyle diamond mine will drop to between 12 and 14 million carats, down from 17 million the year before, with the mine due to wind up operations at the end of the year.
Simon Johanson is a business journalist at The Age and The Sydney Morning Herald.