Rio Tinto’s 2022 Third-Quarter Production Broadly as We Expected, FVE of AUD 99 Retained

No-moat Rio Tinto’s 2022 third-quarter production was broadly similar to the previous corresponding period, or pcp, across its various commodities, though generally up on the second quarter of 2022. Iron ore production from its mines in the Pilbara, which represent much of Rio’s earnings, was around 84 million tonnes (on a 100% basis), about 4% less than our estimate, but modestly higher than the pcp as Rio’s new Gudai-Darri and Robe Valley mines ramp up. We slightly reduce our forecast for 2022 iron ore production to about 320 million tonnes (100% basis), down from 325 million, but with the tailwind of a weaker AUD/USD rate, we think our forecast for unit cash costs of around USD 20 per tonne for 2022 remains reasonable. However, due to production issues at its Kennecott refinery and smelter in the United States as it awaits refurbishment in 2023, we also reduce our forecast copper production in 2022 to about 710,000 tonnes, down from around 730,000 tonnes. Lower production will likely increase cash unit costs, but we have already assumed higher costs in Rio’s copper business due to inflation.