The Rio Tinto Ltd [ASX:RIO] share price was up 0.97% today after announcing their fourth quarter production results.
Even with a cyclone and the pandemic, the company delivered strong results
In 2020s fourth quarter Rio Tinto produced 86 metric tonnes of iron ore, a 3% increase from the same period last year. For the full year, the company produced 333.4 Mt, 2% more than in 2019.
Rio also shipped 88.9 metric tonnes of iron ore in the fourth quarter, 8% more than the previous quarter. Shipments for the year totalled 330.6 Mt, a 1% increase from the previous year. Rio’s mines also delivered a record on total material moved for the year, which was 7% higher than the previous record in 2019.
On other commodities, Rio also produced 2% more bauxite than last year but saw a 9% decline in mined copper production.
Aluminium production stayed the same as last year at 3,180 kt. Earlier last week, the company said they will continue operations at New Zealand’s Aluminium Smelter (NZAS) until December 2024 after reaching an agreement with Meridian Energy.
Rio Tinto not only achieved higher production and shipments for iron ore in 2020, they also got higher prices for the stuff.
Average realised prices for iron ore were US$91 per wet metric tonne and US$98.9 per dry metric tonne. That’s about a 15% price increase for each category compared to last year.
Iron ore prices soared this year after a double whammy hit both supply and demand. On one hand, the pandemic affected operations for Brazilian company Vale, while there was strong demand coming from China.
What could happen next for the RIO share price?
Rio has provided an iron ore shipping guidance of 325–340 metric tonnes for 2021. In comparison, the company delivered 331 Mt in 2020.
Higher iron ore prices this year have been great for iron ore producers like Rio. At time of writing, Rio Tinto’s shares are trading at $119.94, with a 12-month return of 38.11%. It’s also delivered some nice dividends for shareholders.
Will iron ore prices stay high? It looks likely in the short term with China’s demand staying strong, and one of Vale’s shiploaders catching fire recently, which could delay their iron ore shipments.
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