Rio Tinto reported a 3% year-on-year increase in copper equivalent production for H1 2026, driven by Oyu Tolgoi’s 31% growth and record iron ore output in the Pilbara, while maintaining full-year guidance amid geopolitical headwinds.
- 3% copper equivalent production growth in H1 2026
- Oyu Tolgoi copper output up 31%, on track for 2028 target
- Pilbara iron ore hits highest first half production since 2018
- Lithium production ahead of plan at Sal de Vida and Fénix 1B
- Copper C1 net unit cost guidance cut to 30-50 USc/lb
Copper Production Boosted by Oyu Tolgoi Ramp-Up
Rio Tinto (ASX:RIO) delivered a 3% year-on-year increase in copper equivalent production for the first half of 2026, spearheaded by a 31% surge at its Oyu Tolgoi mine in Mongolia. The underground mine’s ramp-up remains on schedule to reach an average of around 500,000 tonnes of copper annually from 2028 to 2036, underpinning Rio Tinto’s copper growth ambitions.
Despite a 7% decline in consolidated copper production in Q2 versus Q2 2025, largely due to operational disruptions at Kennecott and Escondida, the first half copper output edged up 1%. Kennecott faced a safety-related stand-down and a smelter furnace breach that will reduce refined copper production in H2 but not total copper output, as matte production continues. Escondida’s refined copper rose 36% in Q2, offsetting some concentrate grade declines.
Pilbara Iron Ore Hits Record First Half Output
Rio Tinto’s iron ore operations in the Pilbara achieved their highest first half production since the 2018 record year, with a 6% increase to 162.3 million tonnes (100% basis). This growth was supported by productivity improvements and stable mine performance. Pilbara sales volumes also rose 7% year-on-year in Q2, reaching 85.3 million tonnes, the strongest quarterly sales since 2020.
The Simandou project in Guinea is advancing rapidly, with mine construction and port infrastructure both over 75% complete. Rail commissioning was achieved in Q1, and the company expects full production ramp-up by the second half of 2028. However, a tragic fatality in Q1 led to a phased restart of operations, with temporary screening and crushing facilities impacting throughput in Q2.
Lithium Production Surges Ahead of Plan
Rio Tinto’s lithium business showed strong momentum, with Q2 production up 20% year-on-year, driven by the ramp-up at the Rincon starter plant and first production at Sal de Vida and Fénix 1B, both ahead of schedule. Lithium carbonate equivalent output for H1 2026 rose 53% compared to H1 2025, reflecting the integration of Arcadium Lithium assets and expansion projects.
Looking ahead, Rio Tinto is progressing construction of the full-scale Rincon expansion and commissioning phases at Sal de Vida and Fénix. The Nemaska Lithium project in Quebec remains under review, with a decision on mine development expected in H2 2026.
Cost Guidance and Financial Developments
Rio Tinto lowered its copper C1 net unit cost guidance to 30-50 US cents per pound from a prior range of 65-75 US cents, citing higher gold prices and productivity gains. Pilbara iron ore unit cash costs remain stable despite a sharp rise in diesel prices, which added about US$0.8 per tonne in H1.
Financially, the company paid a disputed $443 million tax assessment to Mongolian authorities related to Oyu Tolgoi in March 2026 and is actively engaging with the government to resolve the matter. Additionally, working capital increased by approximately $1.2 billion due to higher inventories following cyclone disruptions and ramp-up activities.
Capital Projects and Growth Pipeline
Rio Tinto continues to advance major capital projects across its portfolio. The Simandou mine and port construction are progressing on schedule, with commissioning milestones targeted for late 2026 and ramp-up through 2028. In Australia, iron ore extensions at Brockman, Hope Downs 2, and West Angelas remain on track for first production in 2027.
In copper, the Resolution project in Arizona has commenced initial underground development following a land exchange, while the Winu project in Western Australia is progressing feasibility studies and environmental reviews, aiming for regulatory approvals and traditional owner agreements this year.
Aluminium operations saw commissioning begin at the $1.5 billion AP60 smelter expansion in Quebec, expected to be fully ramped by year-end. The company is also focused on optimising its aluminium and lithium cost structures amid volatile raw material prices.
Navigating Geopolitical Risks and Market Conditions
Rio Tinto reported limited operational impact from the ongoing Middle East conflict, attributing resilience to its diversified geographic footprint and supply chain capabilities. Commodity prices remained broadly supportive in Q2, with copper prices peaking mid-May before moderating, iron ore prices edging up 2%, and aluminium prices reaching four-year highs due to supply curtailments.
Global economic indicators show mixed signals, with manufacturing expansion and capital investment strong overall, but China’s industrial production slowing and steel exports rising sharply. The US economy benefits from AI-driven investment booms, supporting demand for Rio Tinto’s core commodities.
Bottom Line?
Rio Tinto’s steady production growth and cost improvements position it well to capitalise on copper and iron ore demand, but ongoing geopolitical uncertainties and project execution risks warrant close monitoring.
Questions in the middle?
- How will the Mongolian tax dispute resolution affect Oyu Tolgoi’s financial outlook?
- Can Rio Tinto sustain productivity gains at Kennecott amid operational challenges?
- What impact will port capacity constraints have on Pilbara iron ore sales in coming quarters?