Mining giants, Rio Tinto and Vale, have announced their 2009 full year results.
Overall, Rio Tinto announced underlying EBITDA of US$ 14.3 billion and underlying earnings of US$ 6.3 billion. Debt was reduced from US$ 38.7 billion to US$ 18.9 billion at 31 December. The company also announced US$ 7.2 billion of divestments in 2009, of which US$ 5.7 billion has been completed.
Rio Tinto’s Australian coal operations mined 30.6 million t last year, of which 7.5 million t was hard coking coal. Although this was an increase on 2008 (production of thermal and semi-soft coal was up 5%, primarily due to increased port allocations), earnings dropped by US$ 708 million to US$ 1.013 billion due to lower prices and a change in the sales mix.
Earnings from the US increased by US$ 110 million to US$ 257 million t, despite falls in production resulting from the company’s reduced ownership. In October, the sale of the Jacobs Ranch mine to Arch Coal was completed, followed by the initial public offering of Cloud Peak Energy in November. Rio Tinto now holds 48.3% of the Antelope, Cordero Rojo and Spring Creek mines and a 24.1% in the Decker mine, all of which are now manager by Cloud Peak Energy. Improved prices and lower cash costs offset the impact of lower volumes.
Rio Tinto expects to spend US$ 5 billion on capital expenditure in 2010, including the Kestral coking coal project, which is on schedule to start production in 2012, and the Clermont thermal coal project, which should begin production in Q1 of this year , ramping up to full production in 2013.
The Brazilian miner reported operating revenue of US$ 23.9 billion in 2009 with EBIT of US$ 6.1 billion. Revenue from coal sales totalled US$ 505 million: US$ 299 million from met coal and US$ 205 million from thermal coal. Although Vale’s coal business is relatively undeveloped, the company expects to see the business grow in the coming years with the ramp up of its Australian and Colombian assets, the start up of its Moatize operations in Botswana, and the development of Moatize II.
A recurring theme in the annual reports from the big miners has been the concentration on Asia, and particularly China, in the companies’ outlooks for 2010 and beyond. Rio Tinto and Vale are no exceptions, both seeing future growth in this region as key to their long-term strength.
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