Given that Rio Tinto (ASX: RIO) had previously warned of lower output in the earlier part of 2022, today’s revelations that the iron ore division had posted another poor quarterly performance, should not have come a big surprise to the market.
But that didn’t stop the iron ore giant’s share price from trading -1.69% lower, following news that Rio had shipped 71.5m tonnes of iron ore in the March quarter – lower than UBS’s 72m tonne forecast - down -8% on the first three months of 2021, including 10.9m tonnes of lower grade products.
The iron ore giant had previously flagged it expected lower output in the early part of 2022 due to difficulties bringing its new Gudai-Darri mine online and making up the gap in higher grade output.
Management noted that its operations were negatively impacted by the opening of WA’s hard border to interstate visitors and expects ongoing impacts of coronavirus cases to continue into the current quarter.
"Ongoing mine depletion was not offset by mine replacement projects, with delayed commissioning of Gudai-Darri (first ore still forecast for the second quarter of 2022) and ongoing commissioning challenges at the Mesa A wet plant continuing to impact production ramp up at Robe Valley,” Rio noted.
The company expects increased production volumes and improved product mix in the second half with the commissioning and ramp up of Gudai-Darri, commissioning of the Robe Valley wet plant and improved mine pit health.
The company has guided to no change in full year shipments of 320 to 325m tonnes of iron ore in 2022, compared to FY 2021’s production of 322m tonnes.
Beyond iron ore, Rio produced 125,000 tonnes of refined copper over the quarter – up 4% on the first quarter of FY 2021 - and has stuck to guidance for total production between 500,000 and 575,000 tonnes, compared to 494,000 tonnes in FY 2021.
Due to reduced capacity at its Kitimat smelter following a strike, aluminium production at 0.7m tonnes was -8% lower than the first quarter of FY 2021.
The company guided to FY22 aluminium production of 3.1Mt to 3.2Mt, in-line with FY 2021.
Rio's share price performance over six months.
Get the latest news and insights direct to your inbox