Rio Tinto on Wednesday reported an 8% drop in first-quarter iron ore shipments, with labour shortages and supply chain disruptions curtailing the global miner’s efforts to ramp up its Pilbara operations in Western Australia.
The world’s biggest iron ore producer shipped 71.5 million tonnes (Mt) of the steel-making commodity in the three months ended March 31, compared with the 77.8 Mt a year earlier and a Visible Alpha consensus estimate of 76 Mt.
Rio Tinto recorded a 6.2% year-on-year decline in production to 71.7 Mt, warning of risks to its future output from rising inflation, the war in Ukraine and China’s Covid-19 lockdowns.
Its Western Australian operations were impeded by an increase in Covid-19 cases as the state border reopened, which tightened the labour supply.
Rio said it expected commodity demand to remain boosted by growth-focused policies in China and the global green energy transition, despite the disruptions.
“Rio Tinto produced somewhat of a soggy market update that is largely indicative of broader iron ore supply issues globally that could struggle to meet recovering China demand,” Jamie Maddock, equity research analyst at Quilter Cheviot, said.
“Those supply issues, coupled with Beijing’s efforts to stimulate the economy, will also likely result in higher prices despite iron ore prices having already risen 30% in 2022.”
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