Rio Tinto iron ore output hit by bad weather in Australia, Canada

Rio Tinto iron ore output hit by bad weather in Australia, Canada

Iron ore operations in the Pilbara. (Courtesy of Rio Tinto)

Mining giant Rio Tinto (LON, ASX:RIO), the world's second-largest producer of iron ore after Brazil's Vale, said Tuesday iron ore shipments dropped 8% in the first-quarter from the previous quarter due to weather-related disruptions in Australia and Canada.

Production, however, increased by 16% compared to the same period last year, which means that Rio is on track to meet its full-year target.

Rio has been expanding its Pilbara region mines to satisfy China’s projected demand for the steel making material. However, bad weather conditions in Australia’s iron ore belt, including tropical cyclone Christine, as well as one of the worst Canadian winters in years, fraught efforts to increase output quickly.

"Heavy rainfall associated with [cyclone Christine,] and other adverse weather conditions in January and February impacted across mine, rail and port operations," Rio Tinto said in a statement.

The company said it continues to expect iron-ore production in the Pilbara to reach 290 million tons on an annual basis by the end of June.

Market analyst Rosemary Okolie from,believes Rio Tinto’s Q1 update seems decent enough when compared to last year, as production of iron ore —the bulk of Rio's business— was up.  However, she told there’s some pressure on the company’s shares (down around 1.7%) today as investors digest the impact of the adverse weather in some of Rio’s markets, which drove declines on a quarter-on-quarter basis (production down 6%, shipment down 8%).


Hard coking coal production in Australia was 18% higher than the Q1 of 2013 due to improved production from the Kestrel mine. The Kestrel mine coal handling preparation plant was shut for upgrade works in the Q1 of 2013 as part of the Kestrel mine extension that was completed during the H2 of last year.

Hard coking coal production was 20% lower than in the Q4 due to higher rainfall, in keeping with seasonal trends.

Semi-soft coking coal production was 10% lower than the Q1 of 2013, largely due to a planned change in the production profile.


Copper output was also lower on-quarter, falling 6% to 156,000 tons as production fell at its Chilean Escondida mine —-the world's largest copper operation, owned jointly with BHP Billiton (ASX:BHP) and a Japanese consortium led by Mitsubishi— due to lower ore grades.

Negotiations with the Mongolian government over the development of the Oyu Tolgoi mine are still not complete, and funding commitments from at least 15 commercial banks for the $5bn expansion of Oyu Tolgoi expired on March 31.

The benchmark iron ore price was fetching $117 per tonne on Tuesday morning.