Rio Tinto (NYSE: RIO) reported lower quarterly iron ore output on Tuesday as wet weather and labour shortages impacted its mine and port operations in Western Australia.
Above average wet weather in the mines and workforce availability disrupted maintenance during the quarter, Rio said, while Tropical Cyclone Seroja impacted operations in April.
Production for the quarter stood at 76.4 million tonnes, down 2% from the same period last year.
“You’d have to suggest that its a pretty average result. They have not delivered iron ore into a solid pricing environment,” said David Lennox at Fat Prophets in Sydney.
“There’s nothing that they can do about wet weather – it may be that they are going to have to live with changing environmental conditions. What will save them is the fact that they have got higher commodity prices generally, especially iron ore and copper.”
The world’s biggest iron ore producer shipped 77.8 million tonnes (mt) of the commodity in the quarter ended March 31, up 7% compared with 72.9 mt last year. It maintained its forecast of shipping between 325 mt and 340 mt of iron ore in 2021.
Rio has benefited from strong demand for its higher quality Pilbara blend products due to solid margins at China steelmakers as construction activity and steel demand in the first quarter eclipsed 2020 and 2019 levels.
China’s renewed focus on cutting steelmaking emissions will likely restrain steel exports in 2021, supporting margins globally, it said.
Copper production fell 16% on year ago levels after covid-19 prevention measures limited labour availability in Escondida in Chile.
Its Oyu Tolgoi copper shipments have been impacted by Chinese boarder restrictions due to increased cases of covid-19.
“We declared force majeure on shipments from 30 March and continue to work closely with authorities and our customers to manage the risk of supply chain disruptions,” it said.
“Rio has resumed cross-border concentrate shipments into China on 15 April however, the situation is very fluid with the covid-19 resurgence in Mongolia.”
(By Melanie Burton and Shruti Sonal; Editing by Devika Syamnath and Michael Perry)