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Rio Tinto has signalled it will temporarily take its foot off the iron ore production accelerator this year, issuing below-expectation guidance that raises doubts about recent West Australian production targets.
The guidance, a surprise inclusion in Rio’s December-quarter production report yesterday, comes as iron ore prices languish near $US40 a tonne after suffering a 70 per cent drop during 2014 and 2015.
The dual-listed mining giant yesterday said it planned to produce 350 million tonnes of iron ore this year from its Pilbara region and Canadian iron ore mines (including the equity share of its partners), up from 327 million tonnes last year but down on market expectations of 355 million tonnes.
The guidance came in with a quarterly production performance that met most expectations and which Rio described as “solid”.
The new guidance indicates Rio expects to keep production rates close to those achieved in the December half of 2015, signalling the first prolonged period of steady production after more than $US10 billion of expansion work approved during the boom.
And it raises questions over whether a 2016 Pilbara target of 335 million tonnes, last issued by iron ore boss Andrew Harding in September, will be met.
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