Global iron ore prices have gotten their second boost in a week after Rio Tinto revealed Tuesday that Cyclone Damien last week caused so much damage to the company’s Pilbara iron ore mines last week that it has lopped six million tonnes from Rio’s projected 2020 output.
It is also the second year in a row that Rio’s planned output had been cut in the first two months of the year. In 2019 fires at the Port Lambert loading terminals in WA saw production forecasts trimmed. On top of that quality problems mid year saw shipments curbed to maintain quality levels.
A week ago Vale, the giant Brazilian iron ore rival to Rio, trimmed its first quarter output by 5 million tonnes because of heavy rain in its iron ore production areas.
Global iron ore prices jumped 6% last week and were up another 4% on Monday to $US90.48 a tonne for 62%Fe ore shipped to northern China.
In a statement to the ASX on Tuesday morning, Rio said that “As a result, Rio Tinto’s Pilbara shipments in 2020 are now expected to be between 324 million tonnes and 334 million tonnes (100 per cent basis) versus previous guidance of between 330 million tonnes and 343 million tonnes.”
Last month Rio revealed in its December quarter production report that sales in 2019 fell 3% to 327.4 million tonnes
Rio Tinto said on Tuesday it is working with its customers to minimise any disruption in supply. But the miner did not say how long it would take for production and sales to resume normal levels.
“Rio Tinto’s iron ore operations in the Pilbara, Western Australia, are progressively resuming following the passing of Tropical Cyclone Damien,” the miner said in the statement.”
“The cyclone caused infrastructure damage across our entire Pilbara network, including impact to access roads, electrical and communications infrastructure and accommodation.
“All mine sites experienced some disruption and will take time to return to normal operations.
“Safety remains our top priority as we ramp up operations, and undertake the necessary remediation work, following the passing of the cyclone,” Rio said.
This means around 11 million tonnes of iron ore will now not be available for shipments from the world’s two major suppliers.
It’s not much in terms of the billion tonnes or more shipped every year by sea, but it is tonnage that was considered to be in the market a week ago so it is price bullish, which Rio, Vale, BHP and Fortescue metals will all appreciate.
