Rio Tinto misses on iron ore production
Historic assays build hype for Alicanto at Sala
SPONSOREDalicanto minerals
Makuutu magnetises support for Ionic Rare Earths
SPONSOREDionic rare earths
Fortuna backs West Africa for growth
SPONSOREDfortuna silver mines
West Africa an improved opportunity
SPONSORED
Shipments were 71.5 million tonnes, well below consensus estimates of 76.6Mt and missing RBC Capital Market's more conservative forecast of 73.1Mt.
The figure was 8% lower than the March quarter of last year and 15% below the previous quarter.
Historic assays build hype for Alicanto at Sala
SPONSOREDalicanto minerals
Makuutu magnetises support for Ionic Rare Earths
SPONSOREDionic rare earths
Fortuna backs West Africa for growth
SPONSOREDfortuna silver mines
West Africa an improved opportunity
SPONSOREDRio said the challenging quarter was expected as ongoing mine depletion was not offset by replacement projects due to the delayed commissioning of Gudai-Darri.
Gudai-Darri remains on track for first ore this quarter.
Rio also reported commissioned challenges at the Mesa A wet plant at Robe Valley.
The issues have been exacerbated by rising COVID-19 case numbers in Western Australia.
"Production in the first quarter was challenging as expected, re-emphasising a need to lift our operational performance," Rio CEO Jakob Stausholm said.
"We launched seven more deployments of the Rio Tinto Safe Production System, building on the achievements from the previous rollouts.
"As we ramp up Gudai-Darri, our iron ore business will have greater production capacity and be better placed to produce additional tonnes of Pilbara Blend in the second half."
RBC analyst Tyler Broda noted that the lower grade SP-10 product accounted for 18% of production, which was likely to drive lower price realisations in the current half.
Full-year guidance was maintained at 320-335Mt at C1 costs of US$19.50-21 per tonne.
RBC expects Rio to produce 328Mt this year but says the potential for a downgrade rose with today's results.
Broda noted every other division was also a production miss.
Bauxite production was flat year-on-year but up 4% over the previous quarter at 13.6Mt, while aluminium output was down 8% over the same time last year to 736,000t.
Mined copper production was up 4% year-on-year but dropped 5% quarter-on-quarter to 125,000t.
Stausholm said the company had made positive progress on growth projects.
"We made notable progress during the quarter with the commencement of underground mining at Oyu Tolgoi following a comprehensive agreement reached with the government of Mongolia, completed the acquisition of the Rincon lithium project in Argentina, and signed a framework agreement at the Simandou iron ore project in Guinea," he said.
"These projects are all aligned with our strategy of growing in materials essential to a decarbonising world.
"These actions will ensure we continue to deliver attractive returns to shareholders, as we invest in sustaining and growing our portfolio, be a partner and employer of choice and progress our ambition to achieve net-zero carbon emissions."
Broda said the poor operational performance left Rio with plenty of work to do.
"In our view, the operational environment should start to improve considering improving Pilbara flexibility and, hopefully, a reduction in COVID impacts as the year progresses," he said.
"However, today's result continues to shine a light on the challenges Rio Tinto is facing and is in our view, especially into a potential drop in iron ore prices, unlikely to allow the shares to recoup their recent underperformance."
Rio shares were tradfing about 1.7-1.9% lower in Australia.