Rio Tinto Group NYSE:RIO, a major miner with copper and iron ore operations, reported mixed second-quarter production after unplanned shutdowns at its Kennecott copper operation in the US weighed on output, while its iron ore business recovered from weather-related disruptions earlier in the year. Copper production in the three months ended June 30 declined 7% from the previous quarter after problems at the Kennecott smelter in Utah forced the company to shut down a furnace that now needs to be rebuilt. Rio Tinto expects the operation to remain affected for the next six months, a development investors may closely watch because Kennecott supplies approximately 15% to 20% of domestic US copper demand.
The disruption comes as copper remains central to Rio Tinto's growth strategy, with demand accelerating due to electrification, the energy transition, and the expansion of artificial intelligence data centers. Despite the problems at Kennecott, the company reduced costs across its copper business and maintained full-year production guidance of more than 800,000 tons. The unchanged outlook may offer some support to investor sentiment, as the company currently expects to preserve its wider production target despite the extended operational impact in Utah.
Rio Tinto's iron ore operations delivered a stronger second-quarter recovery after cyclones disrupted Western Australia's Pilbara region during the first quarter. Iron ore shipments reached 88.8 million tons in the three months through June, rising 17% from the previous quarter and 5% from the same period a year earlier. Rio Tinto also said the conflict between the US and Iran had caused no material disruption to production or outbound supply chains across its core commodities, although diesel prices increased from around $85 to approximately $140 a barrel, adding about 80 cents per ton to costs at its Pilbara iron ore business over the past six months.