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Rio Tinto cuts iron ore shipments target

Rio Tinto

Rio Tinto has reduced its guidance for iron ore shipments from Western Australia after contending with labour shortages and development delays during the September quarter.

The company lowered its guidance from 325 to 340 million tonnes to 320 to 325 million tonnes for the 2022-23 financial year.

However, shipments from the Pilbara region in the September quarter were nine per cent higher than the June quarter at 83.4 million tonnes.

Inclement weather and simmering iron ore demand have also hampered Rio Tinto’s output this year.

“The third quarter has demonstrated the resilience of our people in dealing with ongoing COVID-19 challenges,” Rio Tinto chief executive Jakob Stausholm said.

“It has been another difficult quarter operationally and despite improving versus the prior quarter, we recognise the opportunity to raise our performance. We have consequently modestly adjusted our guidance.”

Rio Tinto now anticipates first ore from the Gudai-Darri operation in Western Australia in the first quarter of 2022 due to labour shortages caused by interstate border restrictions across the country.

The Robe Valley brownfield mine replacement project is on track to be completed this year, albeit later than expected.

Rio Tinto stated the average iron ore price for the third quarter was $US163 ($219) per dry metric tonne.

The price slipped to below $US100 per tonne on the Singapore Exchange in September, with UBS anticipating it will average $US89 per tonne next year.

“We cut our iron ore price forecasts for 2021-23 by around 10 per cent as we now expect the market to be in surplus from the second half of 2022,” UBS stated.

Rio Tinto noted an upside in its iron ore portside sales in China after it recorded 3.6 million tonnes of sales in the September quarter.

Although inventory levels are expected to be increased due to a higher volume of its SP10 iron ore fines product.

“We are progressing against our four pillars and striving to make Rio Tinto even stronger, notably to become the best operator,” Stausholm said.

“This will ensure we continue to deliver attractive returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society, particularly in relation to the drive to net-zero carbon emissions.”

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