The third quarter production from mining giant Rio Tinto (LON:RIO, NYSE:RIO) was modestly disappointing, according to Canaccord Genuity.
The London-listed titan reported a dip in copper output and reduced guidance for the industrial metal, confounding hopes that demand was picking up.
Rio said mined copper production in the third quarter fell 24% to 115,000 tonnes against the same period a year ago.
This year, Rio expects its share of mined copper production to total about 510 thousand tonnes, versus between 500 and 535 thousand tonnes previously, but global iron ore production lifted 12% to 86.1 million tonnes in the quarter against a year earlier.
The rise in ore production came despite calls for Rio to further reduce output to help boost ore prices.
“With lower alumina, adjusted copper and weaker titanium dioxide and diamond production targets, this was a modestly disappointing quarter,” Canaccord said, though that did not stop it sticking with its ‘buy’ rating and 3,130p price target.
South African broker Investec said: “With key earnings divisions maintained, our analyst expects only a very slight reduction in FY15E EPS.
“Bloomberg Consensus FY15E EPS range is 140-304cps [cents per share], with a mean of 260c. While Rio has been criticized of being an irresponsible market participant by ‘flooding’ the market with iron ore, we cannot disagree with its strategy, in a commodity it still makes significant margins on,” Investec said.
“We take comfort from the fact that it does respond to market conditions where it needs to, cutting back on production of slag and diamonds, for example,” it added.
Rio Tinto shares closed 20.5p lower at 2,492.5p in London, and the ADRs were down 2.3% at US$38.32 in lunchtime trading in New York.