Rio Tinto ups iron ore cost production guidance after operational problems

Writer,

Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

Rio Tinto reported a 7% fall in second-quarter iron ore production on-year and upped its estimated production costs, following disruptions caused by a cyclone, fire and operational challenges in Australia.

Output of the steel-making ingredient for the three months through June fell to 79.7m tonnes, while shipments fell 3% to 85.4m tonnes.

As already highlighted in the company's first quarter result, disruptions were caused by tropical cyclone Veronica and a fire at Cape Lambert.

'The impacts of Cyclone Veronica continued into the second quarter, with repairs to the Cape Lambert A port facilities impacting Robe Valley and Yandicoogina shipments and operations,' Rio Tinto said.

'All repairs are now complete.'

As announced last month, mine operational challenges were also being experienced, particularly at the company's Greater Brockman hub.

'This has seen shortfalls in planned material movement and impacted mine sequencing both in the Greater Brockman hub and in the broader system,' the company said.

Rio Tinto last month cut its annual iron ore shipment guidance to between 320m and 330m tonnes.

On Tuesday, it also changed its cost guidance to to $14 - $15 per tonne, up from $13 - $14 previously.

'Whilst we experienced operational and weather issues at our iron ore operations in Australia, pricing and market demand has remained robust,' chief executive J-S Jacques said said.

'We remain focused on safely improving and optimising the performance and productivity of our assets in order to drive future cash flow.'

'This, combined with our value over volume strategy and the disciplined allocation of capital, will continue to deliver superior returns to our shareholders in the short, medium and long term.'

In other commodities, second quarter mined copper production fell 13%, bauxite production rose 1%, aluminium production was flat and titanium dioxide production rose 31%.