Rio Tinto iron ore rebound falls short
Rio Tinto’s iron ore operations are still to return to full capacity, with forecast 2020 output still below its original 2019 tip.
Rio Tinto’s flagship iron ore operations are still to return to full capacity after a horror year, with its forecast 2020 output still below its original tip for 2019.
Rio’s iron ore mines produced 326.7 million tonnes of iron ore in 2019, within its twice-revised guidance but 3 per cent lower than the 337.8 million tonnes produced in 2018.
The company says it expects its Pilbara operations to produce 330m to 343m tonnes in 2020, still well below Rio’s original forecast for 2019 production of 338m to 350m tonnes.
While Rio’s year was hit by cyclones and fires at its port operations, stripping it of some production, the 2020 guidance indicates the structural problems within Rio’s flagship business – which have included difficulty hiring and retaining staff, as well as mine scheduling issues at its Brockman operations – still have some way to run.
December quarter production from Rio’s Pilbara operations of 83.6m tonnes was a 4 per cent decline on the September quarter, as Rio continued its major rail maintenance program, and 3 per cent below the December period in 2018.
Despite the operational challenges, the cash kept rolling in for the company on the back of higher iron ore prices.
Rio said it received an average $US79 a tonne from its iron ore, before shipping charges, up 37 per cent on the previous year.
Rio chief executive Jean Sebastien Jacques said the company finished the year with “good momentum, particularly in our Pilbara iron ore operations and in bauxite, despite having experienced some operational challenges in 2019”.
“We are increasing our investment, with $US2.25 billion of high-return projects in iron ore and copper approved in the fourth quarter. We also boosted our exploration and evaluation expenditure to $US624 million in 2019, further strengthening our pipeline of opportunities,” he said.
Rio ticked off on the $US749 million Western Turner Syncline Phase 2 iron ore project in the December quarter, along with a $US1.5 billion cutback of the pit wall its Kennecott copper mine in the US.
The company said its increased exploration and development spending was targeted at the Resolution copper project in the US, and at its Winu copper discovery in the Pilbara and Falcon diamond project in Canada.
Rio’s Bauxite production rose 9 per cent in 2019, to 55.1 million tonnes, with mined copper production falling 5 per cent to 577,400 tonnes.
Rio shares last traded at $103.40.
