Rio expects little growth in 2024

Rio Tinto anticipates only a small increase in Pilbara iron ore production next year after candidly acknowledging the impact of slow environmental approvals and complex Indigenous engagement.

In a major investor update, the group also shed new light on “underlying concerns” it has needed to address in its iron ore business over the past five years.

Chief executive iron ore Simon Trott said the group’s guidance for Pilbara iron ore production in 2024 was 323 million tonnes to 338mt.

That is a small lift from the 2023 guidance of 320mt to 335mt.

Mr Trott reiterated the group was still aiming to finish in the upper half of that guidance range, helped by a 5mt efficiency uplift it had achieved.

He acknowledged the 2023 shipments will include between 45mt and 50mt of the lower-grade SP10 ore product.

This was higher than forecast and reflected delayed access to some mine areas.

“SP10 levels are expected to remain elevated for the next few years as we work through the next tranche of mine replacement projects,” Mr Trott said.

“Levels are dependent on the timing of approvals for planned mining areas.”

Rio is still seeking approvals for its next tranche of new mines, which it needs in order to reach its medium-term production target of 345mt to 360mtpa.

These projects are West Angelas, Hope Downs 1, Greater Nammuldi and Brockman 4.

It is aiming to commence construction of these projects in 2024, subject to regulatory approval, with first ore in 2027-28.

In the meantime, Rio has revised its plans at the Gudai-Darri mine, where it has previously flagged an expansion from the current 43mtpa nameplate capacity to about 70mtpa.

The group is now targeting a 7mt uplift in capacity by 2025 at a low cost of just $70 million.

Commenting on the approvals process, Mr Trott said the average time for environmental approvals for mine projects in Western Australia had increased by 12 to 18 months over the past five years.

It now averaged about four years; double what it was in 2003.

Mr Trott signalled this was an example of a global trend, with a greater focus on environmental, social and governance (ESG) issues.

“Across every global jurisdiction where we operate, the expectations of regulators, traditional owners and civil society have increased,” he said.

“We see this as a consistent global trend.

“ESG stewardship is changing the way we undertake project developments and changing the way we run our operations.”

Rio managing director of Pilbara mines Matt Holcz detailed the manner in which negotiations with traditional owners had become a more integral part of the group’s operations, since the Juukan Gorge issue.

In particular, Rio has modified its mine blasting operations to avoid damage to Aboriginal heritage sites.

“This does come at a productivity cost,” Mr Holcz said.

“These plans can result in more drill metres and slower loading times.”

“However, this is a productivity cost we have to absorb and overcome.”

Despite the changes adopted by the company, it emerged last month that blasting at the Nammuldi mine had dislodged trees and rocks near an ancient rock shelter.

Rio said today it had found no structural damage and no damage to cultural material and was continuing to work with the traditional owners.

Mr Holcz also disclosed the group’s breakneck expansion through the ‘noughties’ had come at a price.

He noted the group’s Pilbara production peaked in 2018 at 338mta after a decade of growth.

“However as we stretched our assets harder, there were underlying concerns,” Mr Holcz said.

“Our mine health was challenged.

“The maturity of our asset health processes was low.

“The quality variation of our shipments to customers was too high and we did not have an integrated approach to protect heritage sites.”

By 2021, production had declined to 320mt before slowly recovering.

“Importantly, however, we have continued to invest in ensuring we have a reliable, resilient and sustainable business,” Mr Holcz said.

He said this included increased mine buffers and improved quality control.

Meanwhile, Mr Trott talked up the long-term potential of its Rhodes Ridge project, jointly owned by Angela Bennett’s family company Wright Prospecting.

The size and quality of the ore body and its location near existing infrastructure have seen Rio highlight Rhodes Ridge as integral to its growth beyond 2030.

It is aiming to start with annual production of 40mtpa but says there is potential to expand to 100mtpa.