Rio Tinto is facing the loss of up to 14 million tonnes of iron ore exports – worth around $US1.2 billion or $A1.7 billion in lost revenue – in 2019 from the combination of a fire at its Cape Lambert export port in January that was compounded by the impact of Cyclone Veronica late last month.
These financial losses will be on top of the estimated $2 billion worth of iron ore not shipped because the main ports were closed for four to five days last month by Veronica.
Rio was forced to declare force majeure to some of its customers last week after the cyclone damaged Cape Lambert A, crippling its shipping operations from the port. It is the second time this year it has been forced to make a force majeure call for shipments from Cape Lambert A.
Rio had said on Friday that it would tell the market in its March quarter production report on April 16, but yesterday surprised with an update on the impact of the damage to its Cape Lambert iron ore export facility.
The company the damage, together with a fire at a screening plant at the port in January, would cost it about 14 million tonnes in lost shipping output this year.
The cyclone had caused non-structural damage to the wharf while flooding at other assets had caused some electrical problems.
The storm had also delayed the return of the screening plant damaged by a fire in January.’
In yesterday’s statement, Rio said its” iron ore operations in the Pilbara, Western Australia, are progressively resuming following the passing of Tropical Cyclone Veronica. However, initial inspections uncovered some damage to the Cape Lambert A port facility. As a result, Rio Tinto has declared force majeure on certain contracts and is working with its customers to minimise any disruption in supply.”
“The impact of the disruption to production caused by the cyclone and repairing the damage sustained at the port facilities, combined with the damage caused by the fire at Cape Lambert A in January, will result in a loss of approximately 14 million tonnes of production in 2019,” Rio said.
As a result, Rio said its Pilbara shipments in 2019 are now expected to be at the lower end of the 338 and 350 million tonnes (100% basis) guidance provided in February.
The Cape Lambert A facility is a four berth iron ore export terminal capable of loading more than 85 million tonnes a year. Principal products loaded through this port are Hamersley Iron Yandicoogina (HIY) and Robe River products.
In 2018, Rio Tinto shipped 57.4 million tonnes of HIY and 32 million of Robe River products.
At this stage, it looks like Cyclone Veronica cost the big miners (Rio, BHP, Fortescue) more than 15 million tonnes in lost exports or about $A2 billion in revenue.
But that figure could creep rise if Port Lambert A is out of action or operating at reduced capacity for a sustained length of time.
It is estimated the Cape Lambert Terminal A could cost Rio about $A150 million in lost revenue for every week it is closed.
Rio shares were %, at the close at $99.53 on Monday after hitting a fresh 10-year high of $99.89 in earlier trade.