Global mining giant Rio Tinto reported second-quarter iron ore shipments below analyst estimates on Tuesday, reflecting impacts to production from a train derailment in mid-May.
The world’s largest producer of iron ore shipped 80.3 million tons (Mt) of the steel-making commodity from its Pilbara operations in the three months ended June 30. This was 3% higher than the previous quarter’s 78 Mt but below the Visible Alpha consensus estimate of 82.1 Mt.
Rio’s Australia shares fell as much as 2.6% to A$116.75 in early trade, hitting their lowest since March 18. The stock was last down 1.8% at A$117.64.
Rio said in May that a train had derailed at its Western Australia iron ore operations, leading to around six days of lost rail capacity.
The firm’s report comes as hopes for more stimulus in China have helped iron ore prices rebound recently after weak demand from the country’s construction sector led to a dull first half.
“The (Chinese) government has provided additional measures for the property market to destock the large inventory overhang,” Rio said on Tuesday.
China’s steel exports in the first half of the year jumped 24% from a year earlier, pointing to a faltering construction sector, which is a heavy user of the metal.
Jefferies analysts do not expect Chinese steel exports to remain at multi-year highs. However, they expect Chinese steel production to remain resilient, which could bode well for Rio’s shipments and production in the coming quarters.
Rio Tinto reaffirmed its annual iron ore shipments forecast of between 323 and 338 Mt.
The miner said economic conditions in top iron ore consumer China are still being supported by a recovery in manufacturing operations and more resilient exports. It, however, said that housing activity in Asia’s largest economy remains weak.
The company flagged possible delays at its greater Nammuldi iron ore project, part of its next tranche of mine replacements.
Mined copper production on a consolidated basis came in at 171 thousand tons (Kt) for the quarter, up 10% from the prior quarter as the company continued to ramp up operations at its Oyu Tolgoi underground mine in Mongolia.
The company, however, lowered its annual alumina production estimates to a range of 7.0-7.3 Mt from 7.6-7.9 Mt, reflecting reduced operation rates at its Gladstone operations in Queensland.
Separately, the miner said its iron ore project in Simandou, Guinea, had received all regulatory approvals from the local and Chinese governments.
Source: Reuters
