Rio Tinto 1Q Iron-Ore Output Higher, Cuts Mined Copper Guidance

   By David Winning 
 

SYDNEY--Rio Tinto PLC overcame disruption from a tropical cyclone in Australia to lift first-quarter iron ore output, but pared annual guidance for mined copper due to earthquake damage at a big U.S. mine and the impact of the new coronavirus.

Rio Tinto said it would also reduce its capital expenditure this year by as much as US$2 billion in response to the coronavirus pandemic and partly to reflect benefits from the strong U.S. dollar.

The miner said it produced 77.8 million metric tons of iron ore in the three months through March. That was 2% higher than a year earlier and was achieved despite damage to infrastructure such as access roads, accommodation and power lines caused by Tropical Cyclone Damien in February.

The storm prompted Rio Tinto to reduce its annual iron-ore shipment guidance to between 324 million tons and 334 million tons in February, and management reaffirmed that target on Friday.

Rio Tinto has benefited from the resilience in prices of iron ore, its chief engine for profits, even as the global economy falters in the face of curbs introduced by countries including the U.S. and China to curb the spread of the new coronavirus.

The virus pandemic has forced Rio Tinto to shutter some operations temporarily, reduce output at others, and rethink how it staffs operations that have traditionally relied on open borders to bring in mineworkers from far away.

Rio Tinto last month slowed mining operations at its Richards Bay Minerals business in South Africa, in line with a government order to prevent the virus from spreading more.

Management has also been working with the government of Quebec to comply with a directive to reduce business activity to a minimum. The Saguenay-Lac-Saint-Jean region accounts for nearly half of the company's global aluminum output and Rio Tinto also operates a port and stockpile in Sept-Iles.

"All major projects progressed well in the first quarter, but are now being affected by Covid-19 including government imposed restrictions on the movement of goods and people," Rio Tinto said. "Recovery rates may differ across regions."

On Friday, Rio Tinto said it now expected capital expenditure of between US$5 billion and US$6 billion this year, down from prior guidance of US$7 billion. "Capital expenditure originally planned for 2020 may subsequently flow into 2021 and 2022," it said.

Management lowered annual production guidance for mined copper to between 475,000 tons and 520,000 tons to reflect a potential reduction in second-half output at the Escondida mine in Chile from measures to combat Covid-19 and repairs at the Kennecott mine in the U.S. where a 5.7 magnitude earthquake on March 18 damaged a furnace.

Rio Tinto reaffirmed expectations of between 55 million tons and 58 million tons of bauxite production this year, building on output of 55.1 million tons in 2019. It also stuck with a forecast for alumina output of 7.8 million-8.2 million tons, up from 7.7 million tons in 2019.

Write to David Winning at [e-mail]

(END) Dow Jones Newswires

April 16, 2020 19:00 ET (23:00 GMT)

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