What's Going On With Mining Giant Rio Tinto Shares Today?

Rio Tinto PLC RIO shares are down premarket today after the company reported full-year FY23 results.

Sales revenue declined 3% Y/Y to $54.0 billion, beating the consensus of $53.9 billion. Underlying EPS decreased 12% Y/Y to $7.25, missing the street view of $7.27.

The mining company witnessed production at Pilbara iron ore of 331.5 million tonnes (+2% Y/Y), with a unit cost of $21.5 per tonnes ($0.2 per tonne lower Y/Y) and an average realised price increase of 2% Y/Y to $108.4 per dry metric tonne.

In 2023, the company continued to roll out the Safe Production System across its business, already delivering real improvements in its Pilbara iron ore operations, realizing a 5 million tonne production uplift in 2023. 

Apart from this, production of Bauxite remained flat Y/Y to 54.6 MT, Alumina remained unchanged Y/Y at 7.5 million tonnes, and Aluminium rose 9% Y/Y to 3.3 million tonnes as the company returned to full capacity at its Kitimat smelter and completed cell recovery efforts at its Boyne smelter. 

Underlying EBITDA fell 9% Y/Y to $23.9 billion due to lower pricing for the Aluminium business, led by London Metal Exchange (LME) prices, decline in premiums and lower alumina pricing. 

Operating cash flow declined 6% Y/Y to $15.160 billion, and free cash flow declined 15% Y/Y to $7.657 billion. Net debt in 2023 rose 1% Y/Y to $4.231 billion.

Jakob Stausholm, Chief Executive Officer, said, “We are making clear progress as we shape Rio Tinto into a stronger and even more reliable company. By focusing on our four objectives, we are building a portfolio that is fit for the future – including our Oyu Tolgoi underground copper mine in Mongolia and the Simandou iron ore project in Guinea.” 

Related: Mining Milestone: Rio Tinto To Launch World’s Largest Project In Guinea’s Simandou Mountains

Outlook: The company expects to deliver another 5 million tonnes of production uplift in 2024. For 2024, 2025, and 2026, Rio Tinto continues to expect capital investment of up to $10.0 billion per year, including up to $3.0 billion in growth per year.

The company expects the ongoing exploration and evaluation expense (excluding Simandou) to be around $1.0 billion in 2024. 

In a separate news, Rio Tinto inked Australia’s largest renewable power purchase agreement (PPA) to date to supply its Gladstone operations in Queensland, agreeing to buy the majority of electricity from Windlab’s planned 1.4GW Bungaban wind energy project.

As per the deal, Rio Tinto will buy 80% of all power generated from the Bungaban wind energy project over 25 years. The contract reflects a major step to repower its Gladstone production assets – Boyne aluminium smelter, Yarwun alumina refinery, and Queensland Alumina refinery. 

Also Read: Mining Giant Rio Tinto Caught Into Water Nightmare At Two Mines: Report

Price Action: RIO shares are down 0.305% at $65.72 premarket on the last check Wednesday.