Rio warns sanc­tions could hit pro­duc­tion

The Courier-Mail - - BUSINESS -

RIO Tinto has warned it may need to cut its alu­minium pro­duc­tion fore­cast be­cause of US sanc­tions tar­get­ing Rus­sia.

The miner has become em­broiled in the in­creas­ing testy re­la­tion­ship be­tween the US and Rus­sia that re­sulted in Amer­ica tar­get­ing key Russian com­pa­nies and busi­ness fig­ures ear­lier this month.

Russian alu­minium pro­ducer Rusal owns 20 per cent of Rio’s alu­minium re­fin­ery in Queens­land and is also a ma­jor buyer of the An­glo-Aus­tralian miner’s alu­mina and baux­ite.

Rio had pre­vi­ously ad­vised in­vestors it ex­pected to pro­duce 3.5 mil­lion to 3.7 mil­lion tonnes of alu­minium this year.

In a quar­terly pro­duc­tion up­date yes­ter­day it said that pro­jec­tion would be ad­justed fol­low­ing the sale of two smelters in France and Ice­land ear­lier this year. It also warned it may need to make fur­ther cuts to its pro­duc­tion fore­cast due to the US sanc­tions.

Alu­minium pro­duc­tion dropped 5 per cent to 800,000 tonnes dur­ing the three months to March com­pared with the same pe­riod a year ear­lier as Rio’s op­er­a­tions in Canada were dis­rupted by in­dus­trial un­rest. In iron ore, Rio’s big­gest earner, the min­ing ti­tan in­creased pro­duc­tion at its Pil­bara op­er­a­tions by 8 per cent to 83.1 mil­lion tonnes dur­ing the quar­ter. It shipped out 80.3 mil­lion tonnes as it built up its stock­piles.

Rio shares ral­lied 87¢ to $78.96 yes­ter­day.

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