Rio Tinto PLC reported a 9% year-on-year increase in copper production for the first quarter of 2026, primarily driven by the ongoing production ramp-up at the Oyu Tolgoi copper mine in Mongolia. The company's three core businesses—copper, iron ore, and aluminum—all showed growth, with full-year production and cost guidance remaining unchanged. Despite disruptions from two hurricanes and geopolitical conflicts, Rio Tinto showcased strong supply chain resilience through its diversified global asset portfolio. Following the release of the first-quarter operational report, the company's shares listed in Australia rose approximately 1%, nearing an all-time high. Analysts at Morgan Stanley described the results as providing "a robust start for Rio Tinto's various businesses in 2026."
Copper operations stood out as a significant highlight in the quarterly report. As a critical metal for electrification and a strategic focus for all major mining companies, including Rio Tinto, copper is benefiting from surging demand driven by global decarbonization efforts and data center expansion. The group's copper production increased by 9% to 229,000 tonnes, largely due to the continued ramp-up of the underground project at the Oyu Tolgoi mine. Production at Oyu Tolgoi surged 56% year-on-year, successfully offsetting output declines at the world's largest copper mine, Escondida in Chile, which faced lower ore grades. Industry-wide, the copper concentrate market remained "extremely tight" during the quarter, with treatment and refining charges falling to a historic low of $95 per tonne. Copper is transitioning from a traditional business segment for Rio Tinto into its most certain growth pillar. The company maintains its full-year copper production guidance of 800,000 to 870,000 tonnes, with the first-quarter annualized figure slightly exceeding expectations. Additionally, Rio Tinto's Resolution copper project in Arizona, USA, completed a historic land exchange in March, with drilling activities now fully underway. The project is positioned for the next phase of development as one of the world's largest undeveloped copper deposits.
In iron ore, first-quarter production in Australia increased year-on-year, with shipments rising marginally by 2%, though this fell short of analyst expectations. Two hurricanes during the reporting period forced port closures, impacting shipments. Production of this key steelmaking ingredient reached 78.8 million tonnes in the three months ending March, up 13% year-on-year, marking the second-highest first-quarter output since 2018. However, two tropical cyclones disrupted operations, limiting shipment growth to just 2%, at 72.4 million tonnes, below market expectations of 74.6 million tonnes. The hurricanes caused an estimated 8 million tonnes in shipment losses, with the company anticipating recovery of approximately half of that volume in subsequent quarters. Full-year iron ore shipment guidance remains unchanged at 323 to 338 million tonnes. Notably, the world's second-largest miner is continuing to advance production ramp-up at the Simandou iron ore project's Simfer deposit in Guinea, Africa. Simfer is a key growth project for Rio Tinto, having achieved first ore last year, with the first shipment of iron ore from the project arriving in China this month.
Regarding aluminum and lithium, Chief Executive Simon Trott stated that the Oyu Tolgoi copper mine is progressing on schedule with its ramp-up, while the integrated aluminum business delivered another strong performance. Alumina production increased by 6% year-on-year to 2 million tonnes, with the resilience of the integrated value chain offsetting an 11% decline in bauxite production due to severe weather. Aluminum production rose slightly by 1% to 840,000 tonnes, with full-year production guidance maintained at 3.25 to 3.45 million tonnes. The lithium business also achieved key milestones during the quarter. Rio Tinto completed its first commercial shipment of lithium carbonate from the Rincon salt flat project in Argentina. Both the Fenix 1B and Sal de Vida lithium projects achieved mechanical completion as planned and are expected to commence initial production in the second half of 2026. First-quarter lithium production reached 12.7 thousand tonnes, compared to zero in the same period last year, marking Rio Tinto's entry into the commercial phase of lithium production.
Despite the conflict involving Iran that began in late February and ongoing disruptions in the Strait of Hormuz, Rio Tinto indicated that the direct operational impact has so far been limited. The company consumes approximately 1.6 billion liters of diesel annually, with about two-thirds used in its Pilbara operations. Rising fuel prices are "steepening the cost curve," but due to economies of scale and global supply chain leverage, Rio Tinto's cost position remains resilient. In the aluminum sector, where the Middle East accounts for about 9% of global production and relies heavily on the Strait of Hormuz for imports and exports, the conflict has led to significant price increases. As one of the world's largest aluminum producers, Rio Tinto increased its aluminum output by 1% to 840,000 tonnes in the first quarter while ensuring supply security for its customers. The company acknowledged that visibility into potential second-half supply chain impacts is "relatively limited" but stated that contingency plans are in place.
Furthermore, facing substantial debt, local currency appreciation, and inflationary pressures, Rio Tinto is under pressure to complete asset divestments. CEO Simon Trott, who assumed the role in August last year, proposed the sale of borates and titanium businesses along with related infrastructure, which is expected to generate approximately $10 billion in proceeds for debt reduction. The company stated it is "actively testing market interest" for these assets. Rio Tinto will hold its Annual General Meeting on May 6.
Comments