Rio Tinto cuts 2017 guidance

Rio Tinto has reaffirmed its guidance for iron ore shipments in 2016 but slashed production guidance for next year after saying it was facing delays with its AutoHaul driverless trains project in the Pilbara. 

The company said it expected iron ore shipments from its global operations to be 350 million tonnes in the 2016 calendar year, after lifting first quarter shipments by 11 per cent to 80.8mt.

That was helped by the expansion of its infrastructure in the Pilbara, which contributed shipments of 76.7mt.

Shipments from the Pilbara rose slightly slower than expected, with the company blaming seasonal re-stocking and weather disruptions from Tropical Cyclone Stan.

First quarter production of the steelmaking ingredient was up 13 per cent at 84mt.

However, the mining giant has cut its production expectations for 2017 by up to 20mt (to 330mt-340mt) because of delays in AutoHaul, which had been due for completion by the middle of 2016.

In a statement, the company said testing and verification of AutoHaul were continuing, with over 75,000 kilometres of mainline trials completed.

The AutoHaul trains are designed to complement the driverless trucks that are part of Rio's mine of the future project.

The company noted that a further investment decision on the Silvergrass iron ore mine was expected in the second half of the year.

Silvergrass is about the only substantial 'greenfield' development project planned for the Pilbara iron ore industry.

It also noted that its Cape Lambert power station project was progressing on schedule, with civil contractors mobilised.

Commenting on the company's overall performance, chief executive Sam Walsh said it continued to experience volatility in commodity prices across all markets.

"In the face of a testing external environment, our focus remains on delivering further cost and productivity improvements, disciplined capital management and maximising free cash flow," Mr Walsh said.

Iron ore, the company's key export, is currently trading around $US60 a tonne, but has still lost more than two thirds from its peak value.

Thermal coal production in the quarter was down three per cent to 5.51mt, while hard coking coal production was down one per cent to 1.98mt.

Bauxite production was up 6 per cent to 11.1mt, while aluminium production had jumped 10 per cent to 887,000t.