The results prove that the NSW Land and Environment Court decision to stop a planned expansion of Rio’s Warkworth mine complex is preventing the company achieving further economies of scale from its thermal coal operations despite the project receiving all state and federal government approvals.

Rio is appealing the decision and has already laid off employees in Warkworth.

Rio’s Australian thermal coal production in the second quarter increased 22% to 5.8 million tonnes.

This was in part driven by a 67% rise in production at Clermont in Queensland as well as the increased production at sites in the Hunter Valley. This followed brownfield expansions and ongoing work to improve the efficiency and productivity of operations, including performance of the load and haul fleets.

Hard coking coal production in Australia was 12% lower than the second quarter of 2012 at 1.7 million tonnes.

The Kestrel mine coal-handling preparation plant had a planned shutdown for upgrade works as part of the Kestrel mine extension project, which was completed in April.

In July, coal production started from Kestrel South and will ramp-up during a gradual transition of production as the existing mine winds down.

Kestrel South is expected to reach full capacity by the end of 2014 and produce an average of 5.7Mtpa over the next 20 years.

Semi-soft production was 14% higher than the second quarter of 2012, as operations in the Hunter Valley changed their production profile to take advantage of the stronger short-term market for alternate product to hard coking coal due to wet weather in Queensland.

Second-quarter production in Mozambique showed a good increase over first-quarter production due to advances in yield performance and operational reliability, according to Rio.

In Queensland’s Bowen Basin, work continued on resource models to support “Order of Magnitude” studies at Mt Robert and Elphinstone, located near Hail Creek. Drilling to test new targets at Winchester South commenced.