Rio Tinto shares are moving higher in line with the rest of the mining sector, despite the company expressing concerns about the prospect of a double dip recession.
The company said its iron ore production fell 2% in the second quarter, and chief executive Tom Albanese added:
In recent weeks, fears about a possible double dip recession in OECD countries and a slight slowdown in Chinese growth have led to some weakening in sentiment. We believe this pattern of volatility in the global economy is set to continue.
But it maintained the overall picture for long term demand was positive, and it had a large range of options for future investment. Now the dispute over Australia's 40% supertax proposal - now amended - had been resolved, it was moving ahead with projects in the country. It has announced $200m of funding to prepare for the expansion of its Pilbara operations in Western Australia. Its shares have added 34p to £31.69 on the update. Charles Kernot of Evolution Securities remained positive:
The mining sector has suffered a significant correction since April 2010, and we see upside to many of the larger miners. We reiterate our buy recommendation on Rio Tinto and our 3590p target price.
Meanwhile Fresnillo has risen 15p to £11.12 after the Mexican miner reported record gold production in the second quarter, a time when prices for the precious metal also hit new highs.
