Rio Tinto sees soft 2022 iron ore shipments on labour issues, project delays

Pilbara, Australia. Image courtesy of Rio Tinto

Rio Tinto on Tuesday forecast slightly weaker-than-expected 2022 iron ore shipments, citing tight labour market conditions and production delays from the new greenfields mine at Gudai-Darri project.

The world’s biggest iron ore producer said it expects to ship between 320 and 335 million tonnes (Mt) in 2022 from the Pilbara region in Western Australia, a forecast with a midpoint below UBS’ estimate of between 330 Mt and 340 Mt. It shipped 321.6 Mt of the steel-making commodity last year.

The delay in production from the new greenfields mine as well as labour shortages in Western Australia due to prolonged pandemic-led interstate border closures also resulted in lower iron ore shipments from the Pilbara region.

While saying it was “encouraged” by growth prospects in 2022, Rio Tinto cautioned that potential disruption from surging covid-19 cases and any geopolitical tensions could take a toll.

“Guidance assumes development of the pandemic does not lead to government-imposed restrictions and widespread protracted cases … which could result in a significant number of our production critical workforce and contractor base being unable to work,” Rio said in a statement.

“This risk is exacerbated globally by tight labour markets and supply chain delays.”

China’s debt-ridden property sector also poses some risk as easing construction activity weighed on demand for raw materials, including iron ore, prices of which nearly halved from a peak hit in May of last year.

Meanwhile, even as the global miner builds its battery materials business with the recent acquisition of the Rincon lithium project in Argentina, it was planning to pause similar work in western Serbia amid protests by green groups across the country.

The world’s biggest iron ore producer shipped 84.1 Mt of the commodity in the three months ending Dec. 31, roughly in line with a UBS forecast of 84 Mt but down from 88.9 Mt a year earlier.

(By Sameer Manekar and Harish Sridharan; Editing by David Gregorio and Bill Berkrot)


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