Rio Tinto Group on Friday reduced its 2021 iron ore shipments forecast, as a tighter labour market in Western Australia delayed the completion of a new greenfield mine at Gudai-Darri.
“It has been another difficult quarter operationally and … we recognise the opportunity to raise our performance,” said chief executive officer Jakob Stausholm.
The miner now expects 2021 Pilbara iron ore shipments at between 320 million tonnes (mt) and 325 mt, down from a previous range of 325 mt to 340 mt.
The downgrade puts Rio on course to lose its spot as the world’s biggest iron ore producer to Brazilian rival Vale S.A. .
“Another disappointing quarter for Rio Tinto as the company struggles to regain operational momentum,” broker RBC said in a research note.
Rio said a tight global supply chain added to its difficulties, while headwinds from China’s regulatory tightening could spark further volatility.
Iron ore prices have nearly halved since hitting a record peak in mid-May, with demand hurt by China’s steel output curbs and a sharp slowdown in the country’s property activity due to a regulatory crackdown.
Still, Rio shipped 83.4 mt of the steel-making commodity in the three months ended Sept. 30, 2% higher than the 82.1 mt shipped last year.
However, Pilbara iron ore production was 4% lower, hurt by heritage management, brownfield mine replacement tie-ins and project completion delays.
Rio’s destruction of the 46,000 year-old Juukan Gorge rock shelters last year had led to a leadership overhaul of the company and a national inquiry.
Rio also delayed first production for the Oyu Tolgoi copper mine in Mongolia by three months to January 2023. Joint venture partner, Canada’s Turquoise Hill Resources, on Thursday estimated additional funding required for the project had ballooned to $3.6 billion.
Delays to development of what will be one of the world’s largest copper mines has antagonised the Mongolian government, which owns a 34% stake, and fuelled a funding spat between Rio and Turquoise Hill.
Rio Tinto shares were down 1% in morning trade in a slightly firmer broader market.
(By Indranil Sarkar, Sameer Manekar and Melanie Burton; Editing by Devika Syamnath, Karishma Singh and Richard Pullin)