Rio Tinto 1Q Iron-Ore Output Higher, Cuts Mined Copper Guidance
17 April 2020 - 09:15AM
Dow Jones News
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 david.winning@wsj.com
(END) Dow Jones Newswires
April 16, 2020 19:00 ET (23:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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