LONDON -- Rio Tinto (LSE:RIO) (NYSE:RIO) has revealed a spike in first-quarter production, which sent the shares up 1.5% to 3,018 pence in early trade, although measures are being taken to cut costs following "operational disruptions" to the Kennecott Utah Copper mine.
Global iron ore production saw a 4% increase year on year, while shipments rose 7% -- both records for the world's second largest mining company. This was enhanced by the recent rerating of Rio's Australian operations at Pilbara through "debottlenecking and productivity improvements with minimal capital expenditure", which quickly recovered from the cyclone season and is running at full capacity.
Chief executive Sam Walsh commented:
Our operations achieved a solid performance in the first quarter, recovering rapidly from the seasonal weather disruptions. At Bingham Canyon, last week's pit wall slide will have a significant impact on our copper production this year. A recovery plan is being implemented to minimize the economic impact. Our two major growth projects in the Pilbara and in Mongolia achieved significant milestones in the first quarter. Both of these industry leading projects remain on track for first production this year and are poised to deliver attractive returns for our shareholders in the years ahead.
Elsewhere, however, Kennecott Utah Copper's Bingham Canyon Mine experienced a slide on April 10 that was estimated to be in excess of 150 million tonnes of material "along a geotechnical fault-line of its north-eastern wall". Ore production remains suspended, with revised expectations estimating around 100,000 tonnes less than previously anticipated.
Shareholders have cause for optimism, though, as Walsh continued: "My streamlined Executive Committee structure is now in place and demanding targets for 2013, including for cash cost savings, are locked into our performance measures. We are making good progress in achieving our cost reduction targets and other priorities for 2013, and are determined in our pursuit of greater value for shareholders."
Shares in mining companies have fallen recently on fears for the global economy, but this may present a good opportunity to buy into a world-class company at a very attractive price.
However, if you're considering companies for your retirement portfolio and you'd like to steer clear of the cyclical mining sector, then I suggest you download our brand-new special free report. In it, our top analysts have plucked five large-cap companies with healthy balance sheets, dominant market positions and reliable cash flows that they believe can offer you the key to financial freedom. Just click here to have it delivered to your inbox immediately – completely free!
Sam Robson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.