- Rio Tinto (RIO) claims it has had a “robust” production performance in the first quarter of 2020
- Despite an overall positive performance, Rio has had to drop its copper production guidance by at least 50,000 tonnes
- This is largely due to COVID-19 restrictions impacting its Chile operations
- Iron ore shipments were down 16 per cent since the December quarter
- However, 73 million tonnes of iron ore was shipped which is a 5 per cent increase, since Q1 2019
- This slight increase is attributed to a higher demand from China, as the country recovers from the virus
- Rio is up 3.95 per cent and shares are trading for $92.05 each
Rio Tinto (RIO) claims it has had a “robust” production performance in the first quarter of 2020.
The mining giant has also noted that while iron-ore remains strong, it has had to slash its copper production guidance by between 50,000 and 100,000 tonnes due to the COVID-19 outbreak.
Rio is now expecting to mine between 475,000 to 520,000 tonnes of copper instead of the predicted 530,000 to 570,000 tonnes.
In March, Rio produced 133,000 tonnes of copper from its global operations, which is down 8 per cent from the same period in 2019.
Specifically, the copper guidance drop is due to an expected drop-off in production at its Escondida operation in Chile due to COVID-19 restrictions and to repair earthquake damage at its Kennecott copper mine in the United States.
Kennecott felt the impacts from a 5.7 magnitude earthquake in March which damaged the furnace. Workers have since gone back to work and are resuming operations.
Iron ore shipments were down 16 per cent on the December quarter. However, the company shipped 73 million tonnes, a 5 per cent increase, in this first quarter compared to the first quarter of 2019.
Its Pilbara operations made a speedy recovery after the tropical cyclone Damien hit earlier this year.
Last month, Rio saw a demand in iron ore from China as the country slowly recovered from the COVID-19 outbreak. The outside trading trial continues with China selling its 1 millionth tonne of iron ore.
The mining magnate reported its bauxite production was 13.8 million tonnes, which is 8 per cent higher than this time last year. This is due to the successful ramp-up of the Amrun Bauxite Project in 2019.
Third-party shipments of the mineral was up 7 per cent, shipping 9.5 million tonnes.
Bauxite guidance remains untouched for the 2020 financial year.
All of Rio’s major projects have progressed well in the first quarter, but are now being affected by the pandemic. Governments have imposed restrictions on the movement of goods and people.
In response, Rio has moved all of its iron ore FIFO workers to Western Australia, if they don’t already live here, and has extended rosters.
Rio has revised its capital expenditure estimate of $7 billion for 2020 down to between $5 billion and $6 billion.
Chief Executive J-S Jacques says the first priority is to protect the health and safety of all Rio’s employees and communities.
“All of our assets continue to operate and we achieved a very robust production performance in the first quarter. Our world-class portfolio and strong balance sheet serve us well in all market conditions and are particularly valuable in the current volatile environment,” he said.
“Our resilience and value over volume strategy means we can continue to invest in our business, and support our communities and host governments,” he added.
Rio is up 3.95 per cent and is trading for $92.05 per share at 12:28 pm AEST.