SYDNEY, April 15 (Reuters) – Rio Tinto’s iron ore shipments fell 8 percent in the first-quarter from the previous quarter due to weather-related disruptions in Australia and Canada, but the miner said it was on track to meet its full-year target.
Production still jumped 16 percent on the same quarter a year ago as the world’s No. 2 iron ore producer behind Brazil’s Vale ramps up production at its Australian mines to meet growing demand from China.
“It appears they were hit a litle harder than we expected by the weather, though we don’t see any issues in meeting their full-year target,” said RBC Capital Markets analyst Chris Drew.
Iron ore has replaced other industrial and precious commodities such as coal, gold and silver as the mineral with the most profit potential, delivering bumper earnings for giant low-cost miners such as Rio and BHP Billiton.
Iron ore prices .IO62-CN=SOI have recovered 12 percent since a steep dip in March on weaker Chinese steel prices. At the current price of $117 a tonne, Rio Tinto enjoys a profit margin of over $60 a tonne.
Rio Tinto Chief Executive Sam Walsh has repeatedly deflected criticism the company is too dependent on iron ore – accounting for almost half of the company’s 2013 revenue – saying China will continue to buy all the ore it can mine for years to come.
Walsh was promoted to chief executive in 2013 to whip the company into shape following disastrous investments in aluminium and coal that led to $14 billion in write-offs.
WEATHER BITES
Rio Tinto said its Iron Ore of Canada division was hit by a colder-than-average winter, which disrupted mining in Labrador over the quarter, while port closures due a cyclone late last year reduced shipments in Australia, the company said.
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