Rio Tinto in catch-up mode as latest iron ore numbers disappoint

Rio Tinto boss Jakob Stausholm says the miner will lift its game over the next couple of months to make up for a challenging first quarter that saw output of its main money-spinner – iron ore- tumble 15 per cent.

Iron ore produced more than 80 per cent of Rio Tinto’s underlying earnings in 2021, or about $450 million a day. However, the mining giant’s latest quarterly figures have not only highlighted the operational complications created by the COVID-19 pandemic in Western Australia but also the impact of delays in commissioning new projects.

The removal of areas from planned mining in the wake of Rio Tinto’s destruction of Aboriginal heritage at the Juukan Gorge caves in 2020 has also weighed down production, as has the need to move large amounts of overburden and lower grade ore to access material to be transported to the coast.

Increased absenteeism due to COVID-19 had been expected and planned for, and was a smaller drag on production than other issues.

In the first three months of 2022, the Anglo-Australian miner produced 71.7 million tonnes of the steelmaking ingredient, a 6 per cent drop year-on-year and down 15 per cent on the previous quarter.

Stausholm said the second quarter would be much more fruitful for the miners as more production comes online. “As we ramp up Gudai-Darri, our iron ore business will have greater production capacity and be better placed to produce additional tonnes of Pilbara blend in the second half,” he said.

Rio also expects the commissioning of a wet plant at Robe Valley will help boost production and its shipments guidance for the full year to December 2022 is unchanged.

RBC analyst Tyler Broda told clients on Wednesday that the delays to Gudai-Darri mine and the impact of COVID-19 had led to a slump in iron production.

“The continuing poor operations leave Rio with plenty of work to do,” Broda said, adding that production problems together with a likely drop in iron ore prices would likely continue to dampen Rio’s share price.