While Rio Tinto (RIO) is sticking with its targeted iron ore output guidance for this year after releasing the March quarter figures yesterday, the company has cut its forecasts for 2017 because of anticipated production delays.
Rio told the ASX yesterday that it still intends to ship around 350 million tonnes from its iron ore operations in Australia and Canada this year. But it has trimmed its target for production next year to between 330 million and 340 million tonnes, down from the previous forecast of 350 million, because of delays with the rollout of its driverless train system, AutoHaul.
The miner kept its output guidance for many of its other commodities – including alumina, bauxite, coal and copper – unchanged. Rio produced a total of 84 million tonnes of iron ore in the first three months of this year, 13% above the first quarter of 2015, but 4% lower than the tonnage mined in the closing quarter of 2015.
Rio produced 79.9 million tonnes from its mines in the Pilbara region of Western Australia, and sold 76.7 million tonnes.
Sales were around 3 million tonnes under the first quarter of 2015 owing to seasonal restocking and weather disruptions caused by a tropical cyclone in January, Rio said yesterday. That’s equal to between 20 and 30 fewer ship movements in the quarter.
Fortescue Metals (FMG) said last week it experienced no delays because of weather in the quarter – but it ships from Port Headland and Rio ships from Dampier which is much further south and suffered from a cyclone in January.
Spot iron ore prices have risen 60% from the lows of around $US38 a tonne hit last December. They ended around $US60 overnight. They rose 23.4% in the March quarter.
The AutoHaul system is already in place; first trials occurred in December 2014 and Rio had vowed to have 41 autonomous trains working its network by the second half of the 2015 calendar year.
“Testing and verification of Autohaul is continuing with over 75,000 kilometres of mainline trials completed, however some delays are being experienced," said the company in a statement.
The $US518 million autonomous train system was supposed to complement the scores of autonomous trucks that Rio has contracted from Komatsu to work its Pilbara mines.
Rio Tinto chief executive Sam Walsh said in yesterday’s statement, “These results demonstrate our commitment to operational excellence in 2016, with notable improvements in several important areas, including a strong performance in aluminium.
"However, we continue to experience volatility in commodity prices across all markets. In the face of a testing external environment, our focus remains on delivering further cost and productivity improvements, disciplined capital management and maximising free cash flow, to ensure that Rio Tinto remains strong.”
Rio shares rose 3% to $48.90.
