Source: David Gray/Reuters
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  • Rio Tinto (RIO) expects to face headwinds to meet its full year iron ore shipping guidance due to COVID-19 disruptions, inflationary pressures and a dropping iron ore price
  • For the June quarter, the company shipped 79.9 million tonnes of the commodity, five per cent higher on the pcp and 12 per cent higher than the last quarter
  • In the first half, Rio shipped 151.4 million tonnes, a two per cent decrease on the pcp, however the company hasn’t changed its full-year guidance of 320 to 335 million tonnes
  • The higher rates of inflation also impacted Rio’s underlying earnings, resulting in increased pre-tax costs of about US$400 million in the first half of FY22
  • Rio is also expecting to see benefits from its recently commissioned Gudai-Darri mine, the company’s first greenfield mine in the Pilbara for over a decade
  • RIO is down 2.3 per cent to trade at $93.80 per share at 2:21 pm AEST

Rio Tinto (RIO) reportedly expects to face headwinds to meet its full year iron ore shipping guidance due to COVID-19 disruptions, inflationary pressures and a falling iron ore price.

For the three months ending June 30, the iron ore giant shipped 79.9 million tonnes of the commodity, a five per cent increase on the prior corresponding period and 12 per cent higher than the last quarter.

In the first half, Rio shipped 151.4 million tonnes of iron ore which marks a two per cent decrease on the prior corresponding period. The company said this was due to skilled labour supply constraints, COVID-19 disruptions, delays and higher than average rainfall in May.

Despite this, Rio has stuck to its full year guidance of between 320 to 335 million tonnes at a cost of between US$19.50/ US$21 per tonne.

Rising COVID-19 cases at its Pilbara operations have led to “elevated levels of unplanned absences”, driving a two per cent drop in shipments of the steel-making commodity in the first half of June. Weather conditions also impacted shipping.

Rio said the economic outlook was weakening due to the tighter monetary policy to curb rising inflation and targets COVID-19 restrictions in China, as well as the Ukraine-Russia war.

The mining company also saw a decline in its commodities prices in the June quarter, amidst growing recession fears and a decline in consumer confidence.

Iron ore Platts CFR price trended downwards to $120 dry metric tonnes at the end of the second quarter, this was driven by extended COVID-19 restrictions that impacted China’s downstream steel demand.

The aluminium LME price fell 32 per cent at the end of the second quarter to $2397 per tonne.

Additionally, the higher rates of inflation have impacted Rio’s underlying earnings, resulting in increased pre-tax costs of about US$400 million in the first half of FY22.

Rio will also begin to see benefits from its recently commissioned Gudai-Darri mine, the company’s first greenfield mine in the Pilbara for over a decade.

CEO Jakob Stausholm said the delivery of first ore at Gudai-Darrie increases mine capacity and support the production of Rio’s Pilbara Blend product.

The mine is expected to reach full capacity by 2023.

On the market, RIO was down 2.3 per cent to trade at $93.80 per share at 2:21 pm AEST.

RIO by the numbers
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