Rio Tinto Tips Rise In Pilbara Iron Ore Exports

By Glenn Dyer | More Articles by Glenn Dyer

Rio Tinto is confident the buoyancy of the Chinese iron ore market won’t end soon as it forecasts a small rise in its 2019 export forecast in the wake of a small rise in its 2018 performance.

The world’s second-biggest iron ore exporter says it expects to ship between 338 million tonnes and 350 million tonnes this year from its mines in the Pilbara.

At the top of the range that would be a rise of 12 million tonnes in 2018 or 3.5%. At current prices of just over $US72 a tonne, the extra tonnes could be worth more than $US950 million to Rio in a full year.

The forecast was after 2018 saw a rise of 2% last year to 338.2 million tonnes, in line with the company’s forecasts of between 330 and 340 million tonnes.

Both the production and shipment of iron ore in the year to December 31 was up 2 percent on the previous year, Rio said in its December quarter and full year production and sales reports on Friday.

Rio Tinto shares ended up 0.3% on Friday at $80.65 (and 1.2% for the week). Rio shares are up nearly 2.8% for 2019 so far.

Rival BHP reports its December quarter and interim production and sales figures this week.

BHP shares rose 0.7% to $33.11 for a rise of nearly 1% for the week.

BHP shares though are down more than 3% for the start of this year.

Rio said it shipped 87.4 million tonnes of iron ore in its fourth quarter — down 3% from the preceding quarter — while production in the three months to December 31 was down one percent at 86.6 million tonnes.

Chinese steel mills curtailed their iron ore imports to around 86 million tonnes a month in November and December as profit margins contracted. But prices ended the year above $US70 a tonne where they are being matinee halfway through the first month of 2019.

Rio CEO, Jean-Sebastien Jacques said the company delivered a solid performance in the final quarter of 2018, particularly in its copper assets.

“During the year, we further strengthened our asset portfolio, continuing to invest in high-quality growth. 2018 saw the early completion of Amrun, the deployment of AutoHaul, the Koodaideri and Robe River investments,” he said.

Just before the end of last year, Rio said it had successfully deployed AutoHaul, the world’s first automated heavy-haul, long-distance rail network.

Rio said its 2018 mined copper production of 634,000 tonnes was 33% higher than the previous year and above the guidance, reflecting strong performance at Escondida and increased production from Rio Tinto Kennecott in the US.

It has forecast 2019’s copper production will be between 510,000 tonnes and 610,000 tonnes while refined copper production is expected to be in the 225,000 tonnes to 265,000-tonne range.

Bauxite production fell 1% on 2017, and aluminium production was down 2%, mostly because of continuing labour disruptions at a smelter in Canada.

Rio expects bauxite production of between 56 million tonnes and 59 million tonnes in 2019, and between 3.2 million tonnes and 3.4 million tonnes of aluminium.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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