Rio Tinto Group reports strong earnings in Q4 2024, highlights growth and diversification efforts.

From Nasdaq: 2025-02-19 18:45:12

Rio Tinto Group reported strong Q4 2024 earnings with CEO Jakob Stausholm highlighting growth momentum and diversification efforts. The company’s production has grown for the third consecutive year, with a 1% increase in copper equivalent production in 2024. The acquisition of Arcadium Lithium is expected to drive further growth. Rio Tinto remains profitable with increased production and sales volumes, supported by a diversified portfolio. The company continues to pay ordinary dividends at the top end of the range for the ninth year in a row, reflecting a resilient business with strong financial performance. In 2024, the company maintained a 60% payout for ordinary dividends, totaling $6.5 billion. Demand for metals varied by sector, with property and construction experiencing weakness while traditional consumer and industrial sectors remained stable. Energy transition sectors, such as renewables, drove growth for copper and aluminum. Despite inflationary pressures, the company saw improving operational stability and lower copper unit costs. Overall, EBITDA was positively impacted by rising copper and aluminum prices. The company also focused on cost discipline and streamlining operations to control costs and improve momentum for 2025.

Despite challenges, the company reported strong underlying EBITDA of $23.3 billion in 2024, driven by rising contributions from aluminum and copper. Iron ore sales compensated for lower volumes, and exploration costs were lower due to finalized agreements. The company also saw positive realized pricing and productivity improvements, although adverse weather conditions impacted production in the Pilbara. Shipments guidance remained unchanged, and productivity improvements from SPS were targeted for the upcoming year. Product strategy work and mine replacement projects were progressing well.

Challenging weather conditions in the Pilbara impacted first-quarter production, but full-year shipments guidance remained unchanged. The company’s aluminum performance was impressive, while copper and minerals also performed well. The safe production system was being deployed at 31 sites, with a focus on deepening maturity at initial locations like the Amrun mine in Queensland, which achieved record bauxite output. Overall, production saw a 7% uplift in 2024, driven by strong performance in key sectors. In 2024, OT underground achieved all ramp-up milestones, increasing output by over 50%. The mine is set to become the world’s fourth largest copper mine by 2036. Rio Tinto remains committed to operational excellence and overcoming challenges at Kennecott and IOC. The company continues to deepen partnerships and focus on decarbonization efforts. With a strong balance sheet and unwavering commitment to shareholder returns, Rio Tinto is well positioned for growth and success in the future. The acquisition of Arcadium will further enhance their operations and portfolio diversification. Rio Tinto remains focused on driving improvements everywhere and achieving a decade of growth. Rio Tinto’s investor relations head discusses strong operational and financial results for 2024. Questions on dividend policy and future cash flow addressed by CFO and CEO, highlighting confidence in investments and growth projects. Discussion on potential impact of tariffs on the aluminium business, with plans to redirect products to other markets if necessary. CEO expresses interest in further investments in the U.S. and Canada, emphasizing ongoing projects and future opportunities in both countries. AP60 project in Canada progressing well, marking the first new smelter in the Western world in 16 years. Rio Tinto’s executives discuss growth projects and investments in Canada, including the progress on Simandou and OT capex. They expect a 50% uplift in copper output this year. In the Pilbara, production has been impacted by wet weather, but guidance remains unchanged. Mitsui joins as a JV partner in Rhodes Ridge, with no changes to equity tonnes or free cash flow. Approval for Pilbara replacement mines is still pending, despite depletion concerns. Despite challenges, Rio Tinto remains optimistic about opportunities for growth and productivity. BHP reports that Western range is on schedule and on budget, with no constraints in port and rail for iron ore. Progress is being made to access land for mining. The company remains on track for the four big replacement mines, with expected timelines moving as planned. Chinese iron ore imports continue to rise due to steel production demand, with Simandou expected to meet supply needs. Simandou is progressing well, with first ore expected at the end of the year and a 30-month ramp-up period. Rincon investment of $2.5 billion will be spread over 4 years, with a focus on accelerating the project after the Arcadium deal closes smoothly. Rio Tinto has a plan for growth, with a focus on technical excellence. The company expects to spend around $0.5 billion on the Rincon project this year. Despite challenges in the iron ore business, Rio Tinto remains optimistic about its SP10 volumes. The company’s capital guidance for 2025 is $10 to $11 billion, with potential for upside risk with the Arcadium projects. Rio Tinto is reviewing its Pilbara Blend strategy for optimization. The company’s iron ore costs for 2025 are expected to be in the range of $23 to $24.5 per tonne, with productivity improvements in the Pilbara system. Rio Tinto is experiencing productivity increases in employee rates, offsetting inflation in Western Australia. The company remains comfortable with a 3% year-on-year guidance. An impairment of $0.5 billion was taken on the double digestion project due to increased scope and capital costs. Despite this, the project remains positive for decarbonization efforts. Rio Tinto is considering the 45 times critical mineral tax credit for copper production in the U.S., which could benefit operations. Progress on resolving the Chinalco stake is a priority for the company, with efforts ongoing. Rio Tinto’s CEO discusses strategy and portfolio rebalancing, emphasizing the value of their iron ore business and rejecting the idea of selling minority stakes. The company sees stable costs for the industry in the next few years and focuses on organic growth while keeping room for potential inorganic growth. The CEO highlights technical capabilities and the capacity for project execution. The company is awaiting the Supreme Court’s decision on the resolution project under the new U.S. administration. Rio Tinto is optimistic about a copper mine project, awaiting approval for a land swap to proceed with drilling. Discussions with Entree Resources for a JV with OT are ongoing, with a focus on resolving tax disputes with the Mongolian government. The future of TiO2 in Canada is uncertain due to tariffs, but Sorel plant produces critical minerals like scandium and titanium metals. Iron ore guidance remains unchanged, with ongoing remediation work on East Intercourse Island following severe flooding. The impact of climate change on infrastructure is a key consideration for the company. Rio Tinto CEO, Jakob Stausholm, addressed rumors of Glencore’s approach, stating no plans to re-enter coal. Dissolving or unifying the DLC structure not a priority. Simandou project ramp-up expected over 30 months, with consortia sharing infrastructure. Cost discrepancy with DLC shareholders not in interest of Rio Tinto shareholders. Shareholders urged to reach out to IR team with further questions. Rio Tinto analysts inquire about consolidation, ramp-up plans, and cost breakdown. Closing remarks encouraged further inquiries and thanked participants.



Read more at Nasdaq: Rio Tinto Group (RIO) Q4 2024 Earnings Call Transcript