Rio warns of headwinds despite strong output

Global mining giant Rio Tinto said Tuesday it achieved record iron ore production and strong steelmaking coal output in the first half of 2012, but warned of significantly weakening conditions. The Anglo-Australian firm said its flagship Pilbara iron ore operations produced 48.6 million tonnes in the second quarter, taking total first-half output to 94.3 million tonnes -- up 4 percent on the same period last year and a record. Rio also produced 2.0 million tonnes of hard coking coal, used in steelmaking, in the quarter and 3.71 million tonnes in the half, nine percent better than the first six months of 2011. Thermal coal, burned for power, was at 4.77 tonnes in the quarter and 8.91 million tonnes in the half, an improvement of two percent from a year earlier. Other key areas, including copper, bauxite, alumina, titanium dioxide and also performed strongly across the quarter. But Rio chief Tom Albanese was cautious on the outlook, warning that "global economic conditions and sentiment dropped markedly in the second quarter." "We are keeping a close eye on the pace of the US recovery, the continuing Eurozone crisis and the impact of efforts to stimulate the Chinese economy on the markets that we serve," Albanese said in the firm's second-quarter production report. "Our investment programme remains resilient to this market volatility, as our tier-one projects are robust under any probable macroeconomic scenario." Rio chairman Jan du Plessis said back in May that he was more confident about the global outlook than he had been six months earlier, with promising signs of recovery in the US and favourable growth in China. Rio said the expansion of its Australian iron ore operations from the current 230 million tonnes per annum (mtpa) to 283 mtpa by the end of 2013 and 353 mtpa by the first half of 2015 remained on track. It affirmed full-year global production guidance of 250 million tonnes for iron ore, 8.5 million tonnes for steelmaking coal and 19.5 million tonnes for thermal coal.