Bad weather clouds Rio Tinto iron ore shipments

Iron ore miner Rio Tinto has been hit by a combination of bad weather and rising costs at its Pilbara operations, recording a 12 per cent drop in exports of the commodity out of its West Australian hub in the June quarter compared to the same time last year.

The company has also seen a cost increase of about $300 million, reflecting a four per cent jump from about $US18 to $US18.5 per tonne, thanks to changes to mine heritage management and higher prices for labour and diesel. Rio’s latest quarterly report released on Friday also revealed its COVID-19-related costs for the Pilbara had hit $100 million in the first half of the year.

Rio Tinto’s iron ore guidance has been revised up.Credit:Rio Tinto

A massive 171 million tonnes of iron ore will need to be shipped in the second half of the year if Rio is to meet the lower end of its production guidance for 2021, which was set between 325 and 340 million tonnes. The company is still upbeat about hitting its target despite exports so being five per cent lower than last year.

The output from the company’s mines in the Pilbara also fell for the second quarter this year with an output of 75.9 million tonnes which was nine per cent down on the same period in 2020.

Shutdowns to enable new mines to come online, wet weather, and cultural heritage management were cited as reasons for the drop in production.

Above average rainfall at the West Pilbara and Robe Valley operations had an impact on about three million tonnes in the first half of the year and shutdowns impacted four million tonnes.

Cultural heritage management changes, in the wake of the Juukan rock shelter destruction last year, has meant this year’s production has been reduced by a further two million tonnes as Rio engages with traditional owners and increases buffer zones around areas of high cultural significance.

About 11 per cent of blasts in the first half of the year were altered to minimise vibration at heritage sites.

Labour shortages in the construction sector and steel fabrication is also having an impact on Rio’s new Pilbara mine Gudai-Darri which will be commissioned later than planned with first ore expected in the crusher later this year.

Rio Tinto chief executive Jakob Sausholm.Credit:Trevor Collens

Rio Tinto chief executive Jakob Stausholm said the company was focused on getting product to its customers in a global economy which has recovered strongly.

“We faced some challenges in the first half notably at our Pilbara operations, which were impacted by replacement mine tie-ins and materially higher rainfall,” he said.

“Heightened COVID-19 constraints, which resulted in numerous travel restrictions, added further pressure on the business and limited our ability to access additional people, particularly in Western Australia and Mongolia, in order to deliver operational improvements or maintenance initiatives and accelerate projects.”

Peter de Kruijff is a journalist with WAtoday.

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