Mining giant Rio Tinto today reported record production of iron ore and coking coal for the first half of the year, but its shares still dipped as the group issued a grim warning about the global economy.
The Anglo-Australian group said iron ore production rose by 4% to 94.3 million tonnes in the first half of the year, while coking coal output jumped by 9% to 3.7 million tonnes. Both resources are used in the production of steel for construction and motor manufacturing industries. However, production of other materials such as copper was flat, while aluminium output fell by 13% over the period.
Chief executive Tom Albanese said: “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.”
Shares in Rio Tinto fell by 48.5p, or 1.6%, to 2937.5p.
Rio derives about 80% of its profits from iron ore and recently committed to spending $3.7 billion (£2.4 billion) towards expanding its Australian ore capacity by another 25%, calling iron ore the best-returning commodities business in a tough global environment.
Investors and miners are worried about a profit squeeze, with costs rising and iron ore prices having fallen by almost a quarter against a year ago as demand growth has slowed dramatically in China, which is the miner’s biggest customer.