Disruptive weather hits Rio Tinto iron ore operations

Image: Rio Tinto

Poor weather conditions have disrupted Rio Tinto’s performance at its Pilbara iron ore operations in Western Australia during the first quarter of 2017.

Rio produced 77.2 million tonnes (Mt) of iron ore in the three-month period, a three per cent fall on the same quarter in 2016. It shipped 76.7Mt in the quarter, which was in line with the three-month period a year earlier.

However, first quarter 2017 production and shipments of iron ore were 10 and 13 per cent lower, respectively, against the final three months of 2016.

Production and shipments were both impacted by significant weather disruptions, resulting in heavy flooding across several sites, Rio reported in its quarterly production update. The disruptions also involved its rail network and ship loading operation, which was suspended on several occasions.

All operations across the mine and infrastructure network have been recovered and are now operating to plan, it added.

Disruptive weather was also an issue at Rio’s mines in Queensland, with bauxite production at its Weipa operations falling seven per cent against the fourth quarter of 2016.

Iron ore and bauxite weren’t the only commodities to record decreases in output compared with the previous quarter, with copper (37 per cent), coking coal (28 per cent), thermal coal (one per cent) and aluminium (seven per cent) all lower.

Rio’s copper output dropped significantly due to a 43-day labour strike at the Escondida mine in Chile and cuts to production at the Grasberg operation because of a dispute with the Indonesian Government.

The company has therefore dropped its 2017 copper guidance to 500,000-550,000 tonnes, down from a previous forecast of 525,000-665,000 tonnes.

Rio chief executive Jean-Sebastien Jacques said despite challenging weather conditions at its WA and Queensland operations the company delivered solid production in the first quarter of 2017.

“Our strategy is unchanged. We maintain our disciplined approach to capital management and maximising cash flow, with a focus on managing costs and enhancing productivity across the business,” Jacques said.

“These actions support the delivery of strong cash returns to shareholders in the short, medium and long term.”