Staff, skills crisis takes toll on Rio

Miner downgrades guidance

MINING giant Rio Tinto has again downgraded its iron ore shipment guidance, blaming labour shortages and a skills crisis for the latest problems besetting its once-dominant iron ore division.

Rio shipped 83.4 million tonnes (Mt) of iron ore in the September quarter, a substantial improvement on the 76.3Mt in the June period.

But the company lowered its annual shipment guidance by 5Mt, saying it now expected to ship 320Mt-325Mt of iron ore from the Pilbara, down from previous expectations of 325Mt-340Mt.

Rio blamed the skills crisis in Western Australia for its latest woes in iron ore, saying it was facing “modest” delays to the completion of its Gudai-Darri iron ore mine, and replacement projects at existing mines “due to the tight labour market in Western Australia”.

But Pilbara iron ore is not the only one of Rio’s divisions facing problems, with the mining major lowering output expectations at its bauxite, copper and Canadian iron ore operations – adding to the grim picture of Rio’s operational performance this year.

Production at its Pilbara operations fell 4 per cent compared to the same period last year, to 83.4Mt “due to heritage management, brownfield mine replacement tie-ins and project completion delays”.

Rio still has plenty of work to do to reach even its downgraded shipment target, with year-to-date exports of 237.5Mt, meaning it will need to load 82.5Mt onto outgoing bulk carriers in the December quarter to meet its latest annual output guidance.

Rio chief executive Jakob Stausholm conceded the September period had been another “difficult quarter operationally”.

“Despite improving versus the prior quarter, we recognise the opportunity to raise our performance,” he said. “We have consequently modestly adjusted our guidance.”

Rio also again shifted the goalposts on its troubled underground copper project in Mongolia, saying it now expected the first output from the multibillion-dollar expansion in early 2023, from previous expectations of first production in October 2022.

And the mining major said it now expected copper output from its global portfolio to come in at the very bottom end of its 500,000-550,000 tonne previous guidance.

The latest downgrades come on top of a shocking June quarter performance from the company, when iron ore shipments plunged 12 per cent to 76.3Mt compared to the same period last year.

Rio did not change its cost outlook for the full year in its September quarter production report, but warned that it was still at risk and was “subject to price escalation of key input costs” such as for freight, demurrage and labour.

Rio shares closed down 0.9 per cent at $99.60 on Friday.