Global miner Rio Tinto said on Wednesday its iron ore shipments in 2023 would be in the same range as this year’s forecast, and warned costs would be higher.
The Anglo-Australian miner expects to ship between 320 million tonnes and 335 million tonnes of the steel-making ingredient next year.
It forecast unit cost of $21 to $22.5 per tonne of iron ore for next year, up from $19.5 to $21 per tonne expected in 2022.
“As has been the trend within the industry, production is getting more challenging and costs are harder to control. Today’s release from Rio is no exception,” said analyst Tyler Broda at RBC Capital.
“We continue to take a cautious stance on iron ore prices and this will act as a drag to Rio’s free-cash-flow as it works through this transition,” Broda added.
“But as the cycle turns (following what we think will be a challenging 2023) this should leave the company in a stronger long-term position.”
Iron ore prices have rebounded to just below $100 a tonne since hitting a three-year low in October.
Rio’s head of economics and markets, Vivek Tulpule, told the company’s investor seminar it expected broadly flat future growth for primary steel demand “as India and Asia take over from China in terms of absolute growth”.
Iron ore is a key ingredient in steel production.
Rio also said it planned to invest a further $600 million in renewable energy assets in Western Australia’s Pilbara region, rich in iron ore in the effort to halve carbon emissions by 2030.
It left unchanged its decarbonization capex spend of $7.5 billion by 2030.
(By Clara Denina and Shashwat Awasthi; Editing by Subhranshu Sahu and Clarence Fernandez)