Rio Tinto shipped 12% less iron ore in the second quarter after storms affected its West Australian operations, the company has confirmed.
The world’s largest iron ore producer shipped 76.3m tonnes in the three months to June 2021, against the 86.7m tonnes seen a year ago.
Consequently, Rio Tinto said it now expects to ship near the lower end of its range of 325m tonnes and 340m tonnes this year, a target analysts said would be tough to meet.
Bauxite production of 13.7m tonnes was 6% lower than the second quarter of 2020 due to ongoing system instability following severe wet weather in Eastern Australia in the first quarter.
Rio Tinto chief executive Jakob Stausholm said: “The global economy, in particular China, recovered strongly and we are intensely focused on servicing our customers with as much product as we can.
“However, we faced some challenges in the first half notably at our Pilbara operations, which were impacted by replacement mine tie-ins and materially higher rainfall.”
Stausholm added that heightened Covid-19 constraints, which resulted in numerous travel restrictions, added further pressure on the business and limited Rio Tinto’s ability to “access additional people in order to deliver operational improvements or maintenance initiatives and accelerate projects”.
Iron ore prices surged to records above $230 a tonne in May thanks to a post-Covid-19 infrastructure drive by China, the world’s largest consumer.
Rio Tinto is expected to post half-year underlying earnings of $10.9bn in July, according to analysts’ estimates, more than double the $4.75bn it reported for the same period last year.
China’s steel demand was up 5% year-on-year in the first half, with the construction and automotive sectors performing strongly, according to the mining company.
“The major iron ore producers’ supply continues to lag expectations, while high-cost supply balances the overall market,” it said.
“Meanwhile, scrap is recovering from the lows in the first half of 2020, with global scrap consumption in the first half of 2021 set to rise 18% year on year as crude steel output and scrap availability improves.”
The second quarter also saw Rio Tinto sign a charter agreement with Eastern Pacific Shipping for three LNG dual-fuel newcastlemax bulk carriers as part of its transition to a low-carbon future.
The 210,000-dwt ships were ordered at China’s New Times Shipbuilding and are due for delivery from the second half of 2023. The deal is said to include options for three more ships.
