Rio Tinto Expects Increased Iron Ore Output in 2nd Half -- Commodity Comment
20 April 2022 - 10:09AM
Dow Jones News
Rio Tinto PLC on Wednesday said first-quarter Australian
iron-ore shipments declined. It also reported a decline in aluminum
production year-on-year, but an increase in mined copper output.
Here are some remarks from its quarterly operational report.
On iron-ore market:
"Iron-ore prices have been volatile, with the Platts 62% Fe
index up 33% at the end of the first quarter ($158/dry metric ton).
Since late February, supply concerns due to the war in Ukraine has
outweighed muted demand growth and a crackdown on speculative
trading behaviour in China. China's economy is getting a boost with
infrastructure spending, but Covid-19 lockdowns pose downside risks
to near-term construction activity."
On iron-ore output:
"Pilbara operations had a challenging first quarter, as
expected, as ongoing mine depletion was not offset by mine
replacement projects, with delayed commissioning of Gudai-Darri
(first ore still forecast for the second quarter of 2022) and
ongoing commissioning challenges at the Mesa A wet plant continuing
to impact production ramp up at Robe Valley. Covid-19 constraints
impacted labor supply as we experienced increased cases on-site in
the Pilbara following the Western Australian border opening in
March. We expect increased production volumes and improved product
mix in the second half with the commissioning and ramp up of
Gudai-Darri, commissioning of the Robe Valley wet plant and
improved mine pit health. Full year shipments guidance remains
unchanged."
On aluminum market:
"The aluminium LME price was volatile ending up 25% at the end
of the first quarter, and above $3,500/ton, supported by
disruptions from the Russia-Ukraine war, high energy prices and
supply tightness in Europe and China. The price hit a record high
of almost $4,000/ton on 7 March as fear gripped the market that
supply from Russia will become inaccessible. Tight physical metal
markets and low inventory levels have also supported increased
market premia across U.S. and Europe during the first quarter.
On aluminum output:
"Aluminium production... was 8% lower than the first quarter of
2021 due to reduced capacity at our Kitimat smelter in British
Columbia following the strike which commenced in July 2021. The
reduced capacity has been partly offset by the continued stable
performance across all remaining smelters, despite considerable
challenges related to unplanned employee absences due to Covid-19.
Agreement with the labor union and employees was reached in October
and preparations continue for the Kitimat smelter to progressively
restart from June 2022 with full ramp up expected by the end of the
year."
On copper market:
"Copper has not experienced a price rally to the extent seen in
other base metals, although the price was up 7% at the end of the
first quarter ($4.69/pound). The global market continues to be
tight, with exchange stocks near 16-year lows, and is still
susceptible to supply disruptions. However, rising global
production later in 2022 should help to offset disruptions.
On battery-materials markets:
"Prices for key battery metals have continued to increase as
strong demand outpaces supply, amidst low spodumene feedstocks.
Lithium carbonate prices have more than doubled in the first
quarter and seen a six-fold increase year on year. Nevertheless,
mine supply growth should pick up due to the ramp up of idled mine
capacity and new projects coming online, especially in
Australia."
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
April 19, 2022 19:54 ET (23:54 GMT)
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