As widely expected by analysts Rio Tinto yesterday cut its full-year iron ore shipment guidance after its output slumped 14% in the March quarter due to a combination of the impact of Cyclone Veronica late in March, the January fire in an ore screening facility at its Cape Lambert operations and a fire in early April at the other Cape Lambert loading terminal.
These three unexpected events forced the mining giant to cut its expected forecast from the lower end of a guidance range of 338 million and 350 million tonnes to 333 million to 343 million.
That’s a little less than expected (the loss could have been up to 14 million tonnes), but analysts point out that Rio still has to complete repairs at Port Lambert and then regain lost sales, if it can. The continuing restriction on exports of iron ore from Brazil’s Vale will help Rio and BHP (which reports its March quarter production and sales figures today)
Pilbara shipments in the March quarter of 69.1 million were down 14% from the first quarter of 2018 and 21% from the December quarter, (March quarter output is often lower because of the cyclone season).
The impact of the Cape Lambert fire was reflected in exports of the company’s Robe Valley lump and fines products which fell 60% on the previous corresponding period.
The screening facility at Cape Lambert, where the fire happened in early January, is responsible for sorting the company’s Robe Valley lump and fines products and is essential for shipping the product.
Rio said any recovery of lost tonnes in the second quarter remains subject to weather.
The company played down the impact of the second fire at its second Cape Lambert export terminal) screen house on April 6 describing it as minor and noting that operations at the facility had restarted.
Cyclone Veronica disrupted the Pilbara ports used by miners Rio, BHP and Fortescue in late March. Rio has already foreshadowed a loss of about 14 million tonnes of production in 2019 due to the disruption caused by the tropical cyclone and a fire at a port facility in January.
“Our iron ore business faced several challenges at the start of this year, particularly from tropical cyclones,” chief executive Jean-Sebastien Jacques said in yesterday’s statement.
“As a result, and following the continuing assessment of damage at the port resulting from the cyclones and other minor disruptions, 2019 guidance for Pilbara shipments is reduced.”
Bauxite production of 12.8 million tonnes in the quarter was 1% higher than the same period of 2018, despite several weather events throughout the quarter significantly impacting production at the Amrun, Weipa and Gove mines on western Cape York.
Aluminum production of 0.8 million tonnes was in line with the first quarter of 2018. Excluding the non-managed Becancour smelter, which was impacted by a lock-out, production was 1% higher, reflecting continued productivity creep.
First quarter mined copper production of 144 thousand tonnes was up 3% than the first quarter of 2018, with strong contributions from Oyu Tolgoi in Mongolia and Rio Tinto Kennecott in the US.
Titanium dioxide slag production of 296 thousand tonnes was also 1% higher than the first quarter of 2018.
Rio said first-quarter production at Iron Ore Company of Canada was up 5% than the corresponding quarter of 2018, despite poor weather conditions limiting production in February.
And at the Oyu Tolgoi Underground Project, the review of the mine design and the development schedule is continuing. The commissioning of the main production shaft is now expected to complete in October of this year.
Rio shares rose 0.4% to $101.20.