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Rio Tinto struggled to hit the iron ore lead after a hard quarter

Rio Tinto is battling to get a year-round guide for its iron ore tipping activity after heavy rains, labor shortages and a new approach to cultural heritage issues affecting shipments.

On Friday in a quarterly update, the world’s largest iron ore producer said it exported 76.3 million tonnes of steel ingredients in the three months to June, down 12 per cent on at the same time a year ago.

Chief executive Jakob Stausholm said Rio had faced “some challenges” in its Pilbara operations in Western Australia, including materially higher rainfall and coronavirus-related work shortages that have hampered its ability to carry replacement mines in the US. so system.

In addition, Rio has lost 2 million tons of iron ore production since it changed buffers and exclusion zones to protect areas of “high cultural significance”. These changes followed last year Juukan Gorge scandal, When ancient Aboriginal rock shelters were destroyed by the expansion of a Rio mine.

As a result, the company predicts that iron ore shipments will be at the end of its driving range from 325m to 340m tonnes, a target analyst said it would be difficult to meet.

“We think something below the bottom of the range is more likely as a very strong second half [of the year] it would be necessary to reach the target range after first-half shipments were only 154 million tonnes, ”said Christopher LaFemina, Jefferies analyst.

However, Rio’s comments will give another boost to iron ore prices, which have risen over the last year and touch a disc above $ 230 a tonne, giving a nice advantage to the company and its rivals BHP Group, Vale and Fortescue Metals Group.

Analysts expect Rio to announce a huge dividend payment of about $ 8 billion when it reports mid-year results this month.

Iron ore is Rio’s main commodity and source of profit. Over the past year, the market has been supported by strong demand from China and a steady growth in supply as Rio and its peers have struggled to get materials to market.

In Friday’s update, Rio also revealed higher production costs in its Pilbara operation. Each tonne of iron ore mined in Australia this year will cost up to $ 18.50 per tonne to produce, in addition to a previous forecast of $ 16.70 to $ 17.70. These figures exclude shipping costs and payment of royalties to governments.

“The change reflects the escalation in the price of key input costs (diesel and labor), costs related to mining asset management,” Rio said.

On Oyu Tolgoi, Rio’s late copper project in the Gobi desert in Mongolia, the miner said the development has been affected by the pandemic and that he still needed to reach an agreement with the government on a number of pending numbers before you can start underground caving.

Oyu Tolgoi is Rio’s most important growth project and at the peak of production it will be one of the largest copper mines in the world.

Rio has also provided an upgrade of its South African mineral sand business, which produces ilmenite, rutile and zircon – materials used throughout, from paint and smartphones to sunscreen.

Rio closed Richards Bay Minerals last month and said more force on contracts citing the deterioration “Security situation” around the operation in KwaZulu-Natal, the home state of former President Jacob Zuma. In May, RBM general manager Nico Swart was ambushed and killed by gunmen while on his way to work.

With all operations reduced, Rio suspended the production guide citing “risks around the time of resumption of operations”.

“After all, it was clearly a second quarter challenge for Rio,” LaFemina said.


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