Rio Tinto (ASX:RIO) share price rises despite aluminium production cuts

Investors appear unfazed by recently announced production cuts in Canada…

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The Rio Tinto Limited (ASX: RIO) share price is on track to finish the day higher. It appears the latest reports of production cuts in Canada isn't slowing down the mining giant on Tuesday.

At the time of writing, shares in the multinational mining company are 1.99% higher at $132.70. Elevated iron ore and copper prices have helped Rio shares to achieve a gain of 27.6% over the past year.

Let's take a closer look at what has instigated the company's production cuts.

Union troubles lead to production cuts

Investors are buying up Rio Tinto shares today despite the latest news of production cuts at the company's Canadian aluminium smelter.

According to a release, production at BC Works smelter in Kitimat, Canada will suffer a significant cut after the company failed to reach an agreement on a new collective labour agreement with a local union.

Production will be reduced to 35% of the smelter's 432,000 tonne annual capacity. This is so it can operate safely under an essential services order granted by the BC Labour Relations Board.

Rio Tinto aluminium managing director of atlantic operations Samir Cairae stated:

Reducing production will have a significant impact on the business and community, but we are committed to taking the necessary steps to operate safely with a reduced workforce.

We have made every effort to reach a mutually beneficial agreement through negotiating in good faith over the past seven weeks, including proposing an independent mediator which was rejected by Unifor Local 2301. We will continue to look for longer-term solutions with the union and work closely with customers and suppliers to minimise disruptions.

Similarly, a reduced workforce is also in place at the Kemano hydro-power facility to ensure safe operations.

The Unifor Local 2301 union represents approximately 900 of the 1,050 employees at the smelter.

Rio Tinto share price on upcoming results

ASX-listed Rio's half-year results are slated for release tomorrow. Investors might be squeezing in last minute in expectation of solid results.

However, the company recently noted iron ore shipments will be at the lower end of its guidance range. Despite this, the continued strength in iron ore prices appears to have maintained optimism towards the Rio Tinto share price.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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