Rio Tinto has flagged “considerable” headwinds in China and a “weakening” economic outlook amid the Russia–Ukraine war and tighter monetary policies to curb rising inflation.
The major miner said prices for its commodities decreased during the second quarter of 2022, with growing recession fears and a decline in consumer confidence to blame.
“China’s industrial activity troughed in May amid COVID lockdowns,” the company said in its quarterly report. “June recovered but uncertainties remain given the potential for ongoing outbreaks.
“Economic stability is a focus (in China), but headwinds are considerable from restricted labour and goods movement and a slowing external environment.”
Despite this, Rio Tinto said there has been a “more accommodative policy stance” to support growth in China, while further measures are expected to support the country’s ailing property sector.
Rio Tinto said it had observed the iron ore Platts CFR (cost and freight) prices trending downwards to $US120 per dry metric tonne (dmt) at the end of the second quarter, even though the average prices were just below $US140/dmt year to date.
The major miner posted a strong operational quarter, with shipments up across most commodities compared to the three months before.
Rio Tinto’s Pilbara iron ore operations shipped approximately 79.9 million tonnes (Mt) of the mineral (100 per cent basis) in the first quarter of 2022, up 12 per cent from the prior quarter.
The company was supported by its Gudai-Darri operation in the Pilbara delivering first ore, which is expected to deliver increased production volumes and improved product mix in the second half of 2022.
“While significantly higher-than-average rainfall in May impacted mine production, continued focus on mine pit health and commissioning of Gudai-Darri supported a stronger second quarter,” the company said.
Rio Tinto’s full-year guidance for iron ore shipments remains unchanged at 320–350Mt.
Bauxite production of 14.1Mt was three per cent higher than the second quarter of 2021, with Rio Tinto highlighting the strong performance of its Weipa operations in far north Queensland.