Rio Tinto shipped 72.9mn mt of iron ore at Pilbara, Australia and produced 77.8mn mt of iron ore in the first quarter (Q1) of fiscal year 2020, up 5pc and 2pc from the prior year quarter amid a rise in demand from China and disruptions of seaborne supply.
Iron ore shipments recovered in March after the disruption caused by tropical cyclone Damien in February 2020, according to Rio Tinto’s first quarter results. Production of iron ore pellets and concentrate at Iron Ore Company of Canada rose by 3pc to 2.6mn mt from the prior year period.
Bauxite production was 13.8mn mt in Q1, up by 8pc from a year ago post ramp-up of Amrun in 2019. Rio Tinto shipped 9.5 mn mt of bauxite, up by 7pc from the prior year period. China’s demand for imported bauxite rose in first quarter as the domestic supplies dropped in quantity and quality amid COVID-19 outbreak.
The aluminium production fell by 2pc to 783,000mt in March quarter as compared to the prior year period as ISAL operated at 85pc capacity in line with the company’s focus on value-added products instead of primary aluminium volumes. The demand for primary aluminium fell on lower automotive production.
Rio Tinto’s mined copper production dropped by 8pc to 133,000mt in March 2019 from the prior year period due to lower copper grades. Dip in production was partially offset by higher throughput. The company’s operations at Kennecott, US returned to normalcy after a 5.7 magnitude earthquake on March 18 that damaged the furnace. The incident will impact Rio Tinto’s full year copper guidance. The company shared that copper demand remained reasonable in the first quarter but prices dropped in line with lower industrial demand.
Government restrictions have had no major impacts on the Rio Tinto’s operations but have disrupted global commodity supply chains. Rio Tinto expects robust demand for iron ore and bauxite in China. The company plans to adjust production levels and product mix to meet customer requirements in 2020.
Rio Tinto maintained its production guidance for 2020 with adjustments in mined and refined copper due to the damage to the furnace at Kennecott and low production at Escondida copper-gold-silver mine in Chile. The company’s capital expenditure is expected to be $5-6bn, down from its previous guidance of $7bn due to COVID-19 constraints and impact of a stronger US dollar. Planned capital expenditure for 2020 is likely to flow into 2021-2022.