Rio Tinto on Tuesday said that China’s reopening from covid-19 restrictions is set to raise near-term risks of labour and supply chain shortages, as it also flagged a strong start to iron ore shipments for 2023.
The Anglo-Australian miner said that consumers remain cautious of China’s property market, which has been supportive to the economy, and that slowing global demand poses some risk to its exports.
Rio looks set to retain its crown as the world’s biggest iron ore producer as quarterly iron ore shipments came in slightly ahead of expectations, near the bottom of the year’s guidance.
“Results are broadly in line,” said Glyn Lawcock of Barrenjoey in Sydney. “It’s good to see they made their iron ore guidance. Rio has also noted that system inventories are healthy… That puts them on track for a good start to 2023.”
Shipments of iron ore rose slightly in the final quarter of 2022, benefiting from a continued ramp-up at Rio’s Gudai-Darri mine in Western Australia, which is expected to reach its nameplate capacity, or the capacity the mine is designed to produce, during 2023.
Iron ore shipments for the final quarter of 2022 rose 3.8% to 87.3 million tonnes (Mt). This made for full-year shipments of 321.6 Mt, beating a Visible Alpha consensus estimate of 320.2 Mt.
Rio Tinto maintained its full-year iron ore shipments forecast of 320 Mt to 335 Mt.
Inflation, led by diesel and labour costs, is likely to have pushed its Pilbara iron ore unit cash slightly above the top end of its $19.5-21.0 per tonne guidance range, it said.
Rio also flagged a tough start to copper production for the year due to smelter rebuild that is required at its Kennecott operations in Utah in the United States.
“The market was probably disappointed by mined copper and obviously they are flagging a tough first half with a major smelter rebuild in Kennecott,” Lawcock added.
Unplanned maintenance was required at Rio’s anode furnaces leading to extended downtime and continued poor anode production, which is likely to result in weak cathode production in the first quarter of 2023.
Rio expects refined copper production at Kennecott to be challenged until it rebuilds its smelter operations, which is planned for the second quarter of 2023 and is expected to take approximately three months.
(By Melanie Burton, Harish Sridharan and Harshita Swaminathan; Editing by Leslie Adler and Deepa Babington)