Rio Tinto scales back, lowers iron ore guidance for 2015
Mining powerhouse Rio Tinto is scaling back on its 2015 iron ore guidance, cutting exports from 350 million tons to 340 million tons due to weather conditions in the outback.
The Anglo-Australian miner said "uncharacteristically severe weather" was to blame for the reduction as it expects to ship less iron ore than initially thought from its networks of mines in northwest Australia this year.
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"Heavy inland rains reduced truck utilization, resulting in lost production at the mines and impacting [on] the ability to rail planned tons [to port]," the company said last week.
“Around seven million tons of shipping capacity was lost directly at the ports due to uncharacteristically severe weather.”
Despite the reduction, Rio produced 79.7 million tons of iron ore and shipped 81.4 million tons in the June quarter.
Rio Tinto, the world’s lowest-cost producer of iron ore, said its ultimate goal is to produce 360 million tons annually from Western Australia’s Pilbara region, which could occur sooner than thought. The company said the infrastructure expansion to facilitate the increased capacity in Pilbara has now been completed.
"Our combination of world-class assets, financial strength and operating and commercial excellence provides a sound base to continue to generate sustainable returns for our shareholders," the company said in a statement.
“The focus is now to ramp up the new equipment to full capacity and generate maximum value from the integrated system.”
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To achieve its new guidance set last week, Rio Tinto will need to accelerate its export rate in the second half of 2015. According to Citi analyst Clarke Wilkins, it will be a challenge.
"It will still be a challenge for them to achieve guidance for the second half of the year but they should be able to get there," he said.
In July, prices for iron ore dipped into the danger zone for most miners, falling below $50 a ton.
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