Rio Tinto also released its production update for the June quarter yesterday which confirmed the problems in its iron ore business in WA had cut output with a rise in costs per tonne.
But the report also revealed that Rio Tinto is looking at a surge in revenue from its iron ore operations – more than $US2 .2 billion – despite the fall in production and exports in the half.
Rio has left unchanged its guidance for the full year, despite continuing problems with ore quality in the Pilbara.
Total iron ore shipments, for the June quarter, fell 3% to 85.4 million tonnes for the quarter with shipments affected by the lingering impact of Cyclone Veronica.
Total shipments for the half-year were 154.6 million tonnes, down 8%. Rio’s share of that figure fell 6% to $134.723 million tonnes from $143.773 million tonnes for the first six months of 2018.
But Rio said iron ore shipments were up 24% in the quarter compared to the March quarter of 2019 when Cyclone Veronica impacted shipments and fires at its Cape Lambert loading terminals cut exports.
Rio maintained its iron ore shipment guidance of 320-330 million tonnes for the full 2019 year (from (the previous range of between 333 and 343 million tonnes) but lifted its unit cost guidance to $US14-$US15 per tonne. Unit cost guidance was previously $US13-$US14 per tonne.
That rise is because the costs will be spread across a smaller tonnage. but the surge in iron ore prices will more than offset that rise
In fact, in the quarterly report, Rio revealed the positive impact of the surge in global iron ore prices thanks to the impact of the January 25 mine dam disaster in Brazil and Cyclone Veronica and the fires.
Rio said its average price for iron ore in the first half of 2019 was $US78.5 per wet metric tonne, compared to a much lower $US57.9 per wet metric tonne in the first half of 2018.
That’s a rise of 36% and means Rio will report a surge in revenue next month for the six months to June from iron ore operations. In fact, it looks like Rio will report revenue from its 100% iron ore business of $US10.57 billion against $US8.3 billion.
“We saw a challenging operational performance across our portfolio in the first half, while also investing in future growth at Richards Bay Minerals and Resolution,” said Rio chief executive Jean-Sebastien Jacques.
“Whilst we experienced operational and weather issues at our iron ore operations in Australia, pricing and market demand has remained robust.”
