Rio Tinto Downgrades 2019 Iron Ore Guidance After Recent Cyclones

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Miner Rio Tinto released its first-quarter production results this week and downgraded its 2019 iron ore guidance on the heels of the recent cyclones battering the Western Australia coast.
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“Our iron ore business faced several challenges at the start of this year, particularly from tropical cyclones,” Rio Tinto CEO JS Jacques said in a prepared statement. “As a result, and following the continuing assessment of damage at the port resulting from the cyclones and other minor disruptions, 2019 guidance for Pilbara shipments is reduced to between 333 and 343 million tonnes.
“The quarterly operational performance in our other products was solid, generally higher than last year. Our focus remains on safety, delivering our ‘value over volume’ strategy and allocating capital with discipline, to continue delivering superior returns to our shareholders in the short, medium and long term.”
The new guidance for Pilbara iron ore shipments — of 333 million-343 million tons — is down from previous guidance of 338 million-350 million tons.
Pilbara iron ore shipments reached 69.1 million tons in the first quarter, down 14% year over year. Pilbara iron ore production of 76.0 million tons marked a 9% decline from Q1 2018.
“Production was significantly impacted by the weather disruptions in March and a fire at Cape Lambert A in January,” the Rio Tinto announcement states. “These events will have an impact on second quarter performance.”
Last month, Tropical Cyclone Veronica battered the northwestern Australia coast, leading to damages at the Cape Lambert A port terminal. The weather event led to the miner declaring force majeure on some iron ore contracts.
Earlier this month, Rio Tinto said the impact of Tropical Cyclone Veronica amounted to 14 million tons of iron ore production.
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Meanwhile, in other materials:

  • Rio Tinto’s Q1 bauxite production reached 12.8 million tons, up 1% from Q1 2018 and up 8% from the previous quarter.
  • Aluminum production hit 796,000 tons, flat on a year-over-year basis and down 3% from Q4 2018.
  • Iron ore pellets and concentrate production reached 2.5 million tons, up 5% from Q1 2018 but down 13% from Q4 2018.

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