On Wednesday, Rio Tinto reported a 5% decrease in its first-quarter iron ore shipments, falling short of estimates due to weather disruptions at ports and reduced production from some of its Western Australian mines. The depletion of the Yandicoogina mine in Western Australia contributed to the decline in shipments, partially offset by activities aimed at replenishing supply at other operations.
The company continues to advance its next phase of Pilbara mine replacement studies, with construction of the Western Range mine now over 50% complete, alongside ongoing work on Hope Downs 1, Brockman 4, Greater Nammuldi, and West Angelas.
During the three months ending March 31, the world’s largest iron ore producer shipped 78 million metric tons from its Pilbara operations, falling short of the Visible Alpha consensus of 79.6 million tons. This marks a decrease from the 82.5 million tons shipped in the corresponding period in 2023. Consequently, Rio Tinto shares experienced a 0.25% decline on Wednesday, aligning with decreases observed in other iron ore producers.
Analysts at Jefferies reiterated a Buy rating on Rio shares, emphasizing the company’s favorable positioning among the “Big 3” iron ore miners to leverage ongoing strength in base metals prices.
While iron ore prices, constituting over 80% of Rio’s underlying operating earnings, are anticipated to increase this year due to heightened demand from China following economic stimulus measures, prices experienced a decline during the quarter.
Rio Tinto reaffirmed its expectation of shipments ranging from 323 million to 338 million tons in 2024 from the Pilbara. At the upper end of this range, the company’s shipments would align with its record shipments in 2018, before progressing towards its medium-term shipments guidance of 345 million to 360 million tons annually.
In the realm of aluminium, Rio’s production reached 826,000 tonnes, marking a 5% increase compared to the same quarter a year ago, while prices have rebounded by 20% since late December lows. Jefferies noted that Rio’s quarterly aluminium volumes remain at multi-year highs, with the recent rise in aluminium prices representing an overlooked potential driver of earnings for the company.