Rio’s production down, profit up

Rio Tinto’s gold production dropped by almost half from 2 097 kgs in 2001 to 1 182 kgs last year and it looks the trend has not changed.

The company produced only 6 480 ounces in the first quarter of this year down from 7 418 ounces in the last quarter and 10 840 ounces it produced in the second quarter of last year.

It says though the closure of the Cam Dump last year accounted for some of the difference, lower ore grades at both Patchway and Renco were major factors.

This year 30 days of production were lost during the first quarter because of the non-availability of foreign currency from the gold fund in January.

A strike in February and the effects of Cyclone Japhet in March added to the production woes.

Despite the lower production, the company saw sales almost double from $2.5 billion to $4.9 billion with operating profit increasing from $212.1 million to $777.4 million.

Net profit shot up from $105.6 million to $581.9 million.

The company spent $218 million on exploration. It is now developing its Murowa Diamond project and has established a company called Murowa Diamonds which is being treated as a subsidiary.

The company says it was disturbed by the policy measures announced in the 2003 budget but this has since been rectified by the introduction of the National Economic Revival Programme which introduced a new exchange rate.

The company says the realistic exchange rate should enable the mines to deal with the challenges of declining ore grades.

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