Strong Chinese steel production is papering over cracks in Rio Tinto’s flagship iron ore division, where production over the past six months slumped to the lowest level in four years.
Rio’s Australian iron ore mines provided just 93 per cent of the iron ore shipped by the company in the three months to June 30, forcing Rio to draw down 5.7 million tonnes of stockpiled iron ore. Those stockpiles were worth almost $1 billion based on the $US119.25 per tonne that iron ore was fetching on Monday.
The weak statistics published by Rio’s most important division on Tuesday only bolster expectations that 2019 will be the first year since the turn of the century that Rio’s Australian iron ore exports will fall sequentially.
Rio also downgraded production targets for its smaller Canadian iron ore division, and Shaw and Partners analyst Peter O’Connor said the market would likely downgrade full year earnings forecasts for Rio by a couple of per cent.
The weak performance of Rio’s Australian iron ore mines appears to be more within the company’s control than its weak iron ore export numbers, which have been influenced by external forces like cyclones, and the fire that affected Cape Lambert port in early 2019.
For the rest of this article: https://www.afr.com/business/mining/steel-mills-to-the-rescue-as-rio-s-iron-mines-hit-four-year-low-20190716-p527oz