Despite tough times for base metal producers, Rio Algom (ROM-T) enjoyed a profitable second quarter as it continued to expand both its copper production and its metals distribution business.
Earnings totalled $12 million (or 16 cents per share) for the three months ended June 30, compared with $28 million (43 cents per share) for the corresponding period last year. The drop is a reflection of a 33% reduction in the average selling price of copper.
Revenue between the two periods rose to $512 million from $499 million. More than offsetting the sharp reduction in the selling price of copper were contributions from Ideal Metal, which Rio acquired in May, as well as increased copper sales and the weaker Canadian dollar.
Rio’s president, Pat James, says the company is working toward achieving three key objectives for 1998: growth in copper production of more than 50%, to 380 million lbs. annually; a 10% reduction in copper cash costs to US55 cents per lb.; and a return of 18-20% on capital employed from the metals distribution business. Operational highlights in the second quarter include: expansion of the Cerro Colorado copper mine in Chile; a new ownership arrangement for the Antamina copper-zinc project in Peru with Noranda (NOR-T) and Teck (TEK-T); and the acquisition of Montreal-based Ideal Metal by Rio’s metals distribution subsidiary, Atlas Alloys.
Revenue from mining amounted to $79 million, compared with $106 million in the second quarter of 1997. The average selling price of copper fell US39 cents, to US81 cents per lb., offsetting a 19% increase in copper sales to 78 million lbs.
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