Rio Tinto Group didn’t get the full benefits of the dramatic iron ore rally after missteps at key operations in Australia meant the No. 2 producer couldn’t extract its best ore when it was most needed.
Rio was forced to cut production at its flagship Pilbara operations in Western Australia earlier this year after falling behind with mine plans. Essentially, the company was producing too much lower-quality iron ore, forcing it to mine less rather than selling a sub-standard product to customers in China.
“We couldn’t access the right ore at the right time,” Rio Chief Executive Officer Jean-Sebastien Jacques told reporters on a conference call. “It is not acceptable.”
Rio reported an increase in first-half profit Thursday, fueled by the spike in iron ore prices, and announced a $1 billion special dividend. Still, the benefits could have been much greater. The impact of the sequencing problems — together with a cyclone and a port fire — cut output volumes by 8% in the first half.
Meanwhile, iron ore prices jumped more than 60% to a five-year high after the disastrous collapse of a dam in Brazil and operational setbacks at Australian mines.
For the rest of this article: https://www.bloomberg.com/news/articles/2019-08-01/rio-s-iron-ore-snarl-means-full-benefit-of-price-surge-missed