By Rhiannon Hoyle

 

Rio Tinto PLC said it shipped less iron ore from its Australian mines in the first quarter of 2022 as it faced challenges progressing new developments, but stuck to its full-year output target saying it expects increased production later this year.

The world's second-biggest mining company by market value on Wednesday said 71.5 million metric tons of iron ore was shipped from its operations in Australia's remote Pilbara region during the three months through March. That was down 8.0% year-on-year, and 15% weaker than the quarter immediately prior.

"Production in the first quarter was challenging as expected, re-emphasizing a need to lift our operational performance," said Chief Executive Jakob Stausholm.

The delayed ramp up of its Gudai-Darri project--where first production is forecast for the second quarter of 2022--and continuing challenges commissioning the Mesa A wet plant slowed the miner's plan to increase iron ore output at Robe Valley, Rio Tinto said.

The miner has faced challenges from snarled supply chains and a tight labor market, which has been exacerbated by rising Covid-19 infections in Western Australia after the state recently eased strict border controls.

"As we ramp up Gudai-Darri, our iron ore business will have greater production capacity and be better placed to produce additional tons of Pilbara Blend in the second half," said Mr. Stausholm.

Rio Tinto is seeking to ship between 320 million and 335 million tons of iron ore from Australia this year, compared to 322 million tons in 2021.

Rio Tinto--which vies with Brazil's Vale SA to be the world's biggest exporter of iron ore--also has a majority stake in an iron-ore business in Canada where it expects to produce between 10 million and 11 million tons of iron ore pellets and concentrate this year. Rio Tinto's share of production from that business totaled 2.4 million tons in the first-quarter, up 3.0% year-on-year, it said.

The miner has been benefiting from elevated iron-ore prices, which have strengthened following Russia's invasion of Ukraine.

"Since late February, supply concerns due to the war in Ukraine has outweighed muted demand growth and a crackdown on speculative trading behavior in China," Rio Tinto said.

Commodity prices have been strong generally due to both "actual and expected disruptions to supply," said the miner, which noted that recent input cost increases were the largest since the 1973 oil crisis.

The miner also highlighted rising interest rates in many parts of the world, which it said risked slowing economic growth, a key driver of commodity demand.

 

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

 

(END) Dow Jones Newswires

April 19, 2022 21:30 ET (01:30 GMT)

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