Mining giant Rio Tinto’s Australian iron ore exports rose 5% year on year in the January-March quarter to 80.3 million mt, maintaining its 2018 shipment guidance.
The exports, however, were down 11% from the October-December period.
“Our world-class Pilbara iron ore assets continue to demonstrate flexibility and the benefits of increased productivity,” chief executive J-S Jacques said in the company’s quarterly results Wednesday.
The miner’s production of the steel-making ingredient was 83.1 million mt for the three months, up 8% year on year but 5% down from the preceding quarter.
“Production benefited from fewer weather disruptions than the first quarter of 2017, along with the ramp up of Silvergrass and the ongoing implementation of productivity improvements across the integrated system,” the company said. “Rail productivity continues to improve, with 85 [million mt] railed in the first quarter. Sales were 2.8 [million mt] below production due to disruptions at the ports resulting from Tropical Cyclone Marcus in March,” it added.
The company’s automation of the Pilbara train system is still in process, with approximately 65% of trains at the end of the quarter in autonomous mode with a driver onboard for supervision and more than three million kilometres now completed in this mode. It’s on schedule to be completed by the end of the year, Rio said.
The latest quarterly performance saw the company maintain its 2018 Pilbara iron ore shipment guidance of between 330 million mt and 340 million mt on a 100% basis.
Rio Tinto beat analyst expectations for production and shipments. RBC Capital Markets had been expecting both production and exports to total 78.1 million mt and JPM had pegged their forecast at 79.9 million mt.
It was a “solid performance at its key Pilbara iron ore operations,” RBC analyst Paul Hissey said in a research note.
Of the total production, Rio Tinto’s share was 69.1 million mt, which was made up of 20.7 million mt of Pilbara Blend lump, 29.8 million mt of Pilbara Blend fines, 1.6 million mt of Robe Valley lump, 3.1 million mt of Robe Valley fines and 13.9 million mt of Yandicoogina Fines.
Approximately 18% of the sales in the quarter were priced by reference to the prior quarter’s average index lagged by one month, with the remainder sold either on current quarter average, current month average or on the spot market.
About 34% of the sales were made free on board, with the remainder sold including freight, it said.
IOC PRODUCTION GUIDANCE LOWERED
Meanwhile, Rio Tinto lowered its 2018 production guidance for its Iron Ore Company of Canada after a strike action during the quarter impacted the production.
The IOC guidance is now at 10.3 million mt-11.3 million mt of iron ore pellets and concentrates, down from previous expectations of 11.5 million mt-12.5 million mt.
IOC pellet production of 2.7 million mt in the March quarter — including Rio Tinto’s share 1.6 million mt — was 7% higher on the year, with pellet demand continuing to be strong and the product mix being optimized to meet customer demand, the company said.
Concentrate production for sale of 1.4 million mt, which included Rio Tinto’s share 0.8 million mt, was 28% lower year on year, mainly due to increased ore hardness and an unplanned shutdown of the Parallel Ore Delivery System.
Collective bargaining negotiations at IOC’s Labrador City operations were suspended from March 27 due to lack of an agreement and the local union workforce voted to strike.
“Progress has been made to reach a new labor agreement, and a vote is imminent,” it said.
The new guidance assumes a vote in favor of the new bargaining agreement and represents the loss of about one month’s production.
Source: PlattsPrevious Next