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Rio Tinto iron ore shipments drop on COVID delays, flags China risks

Rio Tinto on Wednesday reported lower-than-expected iron ore shipments in the first quarter, and warned a resurgence of COVID-19 lockdowns in China and a prolonged Russia-Ukraine war could have risks.

The global miner’s efforts to ramp up its Pilbara operations in Western Australia were impacted in the first three months of the year by labour shortages and supply chain snags.

The mineral-rich state lifted hard-line border curbs put in place to curb the spread of COVID-19 only in early March, leaving companies to battle for months a dearth of mine workers and train drivers even as pent-up demand fuelled a rally in commodities.

“Production in the first quarter was challenging as expected, re-emphasising a need to lift our operational performance,” Rio Tinto Chief Executive Jakob Stausholm said in a media statement.

The world’s biggest iron ore producer shipped 71.5 million tonnes (Mt) of the steel-making commodity in the three months ended March 31, compared with 77.8 Mt a year earlier and a Visible Alpha consensus estimate of 76 Mt.

Production for the quarter stood at 71.7 Mt, down 6.2% from a year earlier.

The company said it expects increased iron ore production capacity and improved product mix in the second half with the commissioning and ramp up of Gudai-Darri, a greenfield mine development in East Pilbara.

Rio said in its report that economic growth and commodity demand started positively this year as the world continues to recover from the pandemic downturn.

“However, market expectations have been revised downwards amidst sustained high inflation, the outbreak of the Russia-Ukraine war and a resurgence of COVID-19 lockdowns in China,” the report said.

In March, Rio became the first major mining company to announce it was cutting all ties with Russian businesses. It has no operational assets in Russia or Ukraine, but owned an 80% stake in Queensland Alumina Ltd (QAL) in a joint venture with Russia’s Rusal, the world’s second-largest aluminium producer.

Rio Tinto said earlier this month that it had taken sole charge of operations at QAL.

Global miner BHP Group is scheduled to report its third-quarter production results on Thursday. (Reporting by Sameer Manekar in Bengaluru and Praveen Menon in Sydney; Editing by Sriraj Kalluvila and Cynthia Osterman)
Source: Reuters

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