Rio Tinto to slash iron ore exports on shipping hitches
SYDNEY: Global miner Rio Tinto yesterday cut its 2016 guidance for iron ore shipments by as much as five million tonnes after releasing lower third-quarter production data, citing shipping interruptions.
The downward revision — equivalent to as much as US$290 million (RM1.21 billion) at current ore prices — comes as the steelmaking commodity stages a recovery on the back of a surprise lift in demand from China.
Rio Tinto said third-quarter shipments from Australia fell two per cent from the previous quarter to 80.9 million tonnes and five per cent from the same period a year ago.
“Shipments were reduced by port and rail maintenance during the quarter and annual shipment guidance is revised to between 325 and 330 million tonnes for this year,” said the company.
Calendar 2017 production guidance was left unchanged at 330 million to 340 million tonnes
The metals and mining corporation’s cutback came as smaller rival Fortescue Metals Group boosted iron ore shipments by five per cent in the September quarter to 43.8 million tonnes, adding that its costs had fell for an eleventh straight quarter.
Iron ore accounts for the majority of Rio Tinto’s worldwide revenue and all of Fortescue’s revenue.
It is mostly mined in Australia and sold to Chinese steel mills.
RBC analyst Paul Hissey said in a note said he favoured Rio Tinto over other major diversified producers due to its large exposure to iron ore, which had the potential to sustain current price levels.
Iron ore was selling for US$58 a tonne yesterday, the highest in more than a month, driven by an unexpected surge in demand from China.
China’s iron ore imports reached 93 million tonnes in September, the second highest on record, as healthy profits pushed steel mills to ramp up output.
“Steel consumption in China remains stable,” said Fortescue managing director Nev Power.
Meanwhile, BHP Billiton on Wednesday held its fiscal 2017 production guidance for iron ore of 265 million to 275 million tonnes after posting a modest one per cent decline in output in the September quarter. Reuters