Project delays weigh on Rio output

“Challenging as expected,” is how Rio Tinto chief executive Jakob Stausholm chose to describe production during the mining giant’s first three months of 2022.

Iron ore shipments from Rio’s Pilbara operations reached 71.5 million tonnes out of a total 71.7 million tonnes produced for the period, marking an 8 per cent decline on the same period last year and 15 per cent less than the previous quarter.

Broadly, the weaker performance was attributed to ongoing mine depletion that had not been offset by replacement projects, namely, the in-development Gudai-Darri project north-west of Newman.

Ramp-up at the greenfield development was subject to commissioning delays and supply chain quality issues, with pandemic-induced labour shortages and staff isolation requirements also contributing to the mix.

Despite the sluggish start to the year, Rio’s full-year shipments guidance of between 320 million tonnes and 335 million tonnes remains unchanged.

That is assuming commissioning and ramp-up at Gudai-Darri goes to plan and COVID disruptions are kept to a minimum, with first ore for the mine still planned for this quarter.  

“Production in the first quarter was challenging as expected, re-emphasising a need to lift our operational performance,” Rio Tinto chief executive Jakob Stausholm said in a statement.

“As we ramp up Gudai-Darri, our iron ore business will have greater production capacity and be better placed to produce additional tonnes of Pilbara Blend in the second half.”

In terms of overseas activities during the period, Rio began underground mining at the Oyu Tolgoi copper-gold deposit in Mongolia and finalised its $825 million acquisition of the Rincon lithium project in Argentina.

Construction at Oyu Tolgoi was also hindered by COVID-19, with a reforecast underway to determine any likely cost or schedule impacts.

At 2:32pm AEST, Rio Tinto shares were down 1.32 per cent to trade at $120.06.