Mixed outlook in Rio Tinto quarterly report
Monday, July 18th, 2022
Rio Tinto has highlighted strong performance at a number of its sites, while flagging “considerable” headwinds in China and a “weakening” economic outlook amid the Russia–Ukraine war and tighter monetary policies.
“We strengthened our operational performance at a number of sites, which we will now replicate across the portfolio,” Rio Tinto chief executive Jakob Stausholm said in the company’s quarterly report.
“The delivery of first ore at Gudai-Darri, our first greenfield mine in the Pilbara for over a decade, increases mine capacity and supports production of our flagship Pilbara Blend.
“We also fired the first draw bell at the Oyu Tolgoi underground project in June, and started producing scandium and tellurium. These critical minerals are being extracted from existing waste streams at our titanium operation in Quebec and copper operation in Utah, without the need for new mining.”
However, the major miner said prices for its commodities decreased during the second quarter of 2022, with growing recession fears and a decline in consumer confidence to blame.
“China’s industrial activity troughed in May amid COVID lockdowns,” the company said in its report. “June recovered but uncertainties remain given the potential for ongoing outbreaks.
“Economic stability is a focus (in China), but headwinds are considerable from restricted labour and goods movement and a slowing external environment.”
As Stausholm indicated, the company posted a strong operational quarter, with shipments up across most commodities compared to the previous period.
Rio Tinto’s Pilbara iron ore operations shipped approximately 79.9 million tonnes (Mt) of the mineral (100 per cent basis) in the first quarter of 2022, up 12 per cent from the prior quarter.
Gudai-Darri delivering first ore was key. The Pilbara operation is expected to deliver increased production volumes and improved product mix in the second half of 2022.
“While significantly higher-than-average rainfall in May impacted mine production, continued focus on mine pit health and commissioning of Gudai-Darri supported a stronger second quarter,” the company said.
Bauxite production of 14.1Mt was four per cent higher than the previous quarter, with Rio Tinto highlighting the strong performance of its Weipa operations in far north Queensland.
The company also mentioned some of its environmental, social and governance (ESG) efforts in the quarter.
“We are committed to transforming our culture and building better relationships,” Stausholm said. “In May, we signed a Heads of Agreement with the Puutu Kunti Kurrama and Pinikura (PKKP) people which will guide the co-management of PKKP country where mining takes place.
“We made progress against our four objectives during the first half and we are determined to further strengthen Rio Tinto while investing to grow in the commodities needed for the energy transition, decarbonise our portfolio, be a partner and employer of choice, maintain our tight capital allocation and continue to pay attractive dividends.”