Recent developments rio shares have outperformed over

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RECENT DEVELOPMENTS RIO shares have outperformed over the past three months, rising 6.1% while the S&P 500 has gained 2.3%. They have also outperformed over the past year, gaining 38% while the index has advanced 13.4%. The record is similar for the stock against the industry ETF IYM. RIO shares have outperformed the ETF over the past quarter and the past year, but have underperformed over the past five years. The company reports financial results twice a year but releases a quarterly operational review. On April 18, Rio Tinto reported 1Q production results. Iron ore shipments of 80.3 million tons rose 5% year-over-year but were down 11% sequentially. Bauxite production rose 65% year-over-year to 12.7 million tons, but fell 8% from the prior quarter. Copper production rose 65% from the prior year as output recovered at the Escondida mine following a strike in the first half of last year. Following the announcement that the U.S. would implement sanctions on various Russian companies and individuals, Rio Tinto said on April 13 that it would declare force majeure on certain contracts and that it would work with its customers to minimize any supply disruptions. On May 10, Rio Tinto and Alcoa announced the formation of a joint venture, Elysis, to develop a carbon-free aluminum smelting process. Apple will also invest in the project and provide technological support. Elysis will be located in Montreal. EARNINGS & GROWTH ANALYSIS Rio Tinto is a major global producer of iron ore (54% of 2017 EBITDA), aluminum (16%), copper and diamonds (25%), and energy and other minerals (6%). First-quarter results and outlooks for these businesses are summarized below: Iron Ore: Global iron ore production rose 5% from the prior year to 80.3 million tons. The company expects 2018 production of 330-340 million tons. Aluminum: Rio Tinto has three products in this group – bauxite, alumina and aluminum. In 1Q18, bauxite production rose 12% to 12.7 million tons; alumina production fell 3%; and aluminum production fell 5%. In 2018, management expects production of 49-51 million tons of bauxite, 8.0-8.2 million tons of alumina, and 3.5-3.7 million tons of aluminum products. The company may adjust its forecast for aluminum production based on the completion of the Aluminum Dunkerque and ISAL smelters, and the impact of U.S. sanctions. Copper & Diamonds: Mined copper production at Rio Tinto fell 20% year-over-year in 1Q18, reflecting the impact of lower ore grades, though refined copper production rose 19%. Mined copper at Escondida rose 235% and refined copper production rose 155%. Management expects to mine 510-610 thousand tons of copper in 2018, and to produce 225-265 thousand tons of refined copper. Diamond carat production rose 18%. Management expects full-year production of 17-20 million carats in 2018.
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M ARKET D IGEST - 13 - Energy and Minerals: Production of hard coking coal fell 30% from the prior year. Thermal coal production rose 16%.
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  • Spring '12
  • DirkJenter
  • Finance, ........., BHF, Market Digest

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