Rio Tinto challenges in Pilbara hit iron ore output

Rio Tinto in the Pilbara. Credits: Csfoto - Christian Sprogoe (photographer)

Rio Tinto has lowered its iron ore guidance for Pilbara shipments due to mine operational challenges at the company’s Greater Brockman hub.

The disruptions have resulted in a higher proportion of lower grade products, which Rio Tinto said was, “partly to protect the quality of our flagship Pilbara blend.”

Rio Tinto sold approximately 1.5 million tonnes of lower grade materials in the first quarter of this year and intends to make additional sales of these products throughout the year.

In light of the challenges, Rio has reviewed its mine plants, resulting in guidance of Pilbara shipments for this year being revised to between 320–330 million tonnes, down from between 333–343 million tonnes.

Given the change in volume guidance, Rio Tinto will update its unit costs in the upcoming second quarter operational review, to be released July 16 this year.

The decrease in guidance for Pilbara shipments follows similar activity occurring earlier this year, when cyclones damaged ports in the region and a fire affected production at Cape Lambert A in January.

This resulted in Pilbara iron ore shipments equalling 69.1 million tonnes in the first quarter of the year, down 14 per cent on the first quarter last year.

These disruptions resulted in a revision to between 333–343 million tonnes, from expectations at the start of the year being between 338–350 million tonnes.

Rio Tinto’s announcement comes as the price for iron ore hovers around the $US110 mark, representing the commodity’s highest price since April 2014.

The company’s share price dropped 4.9 per cent overnight following the news and is now at $100.53.

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