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Labour Shortage Prompts Rio Tinto To Trim Its Iron Ore Shipments Forecast For 2021


10/15/2021


Labour Shortage Prompts Rio Tinto To Trim Its Iron Ore Shipments Forecast For 2021
Following the delay in the completion of a new greenfield mine at Gudai-Darri due to a shortage of labor market in Western Australia forced the mining giant Rio Tinto Group to trim down its iron ore shipment forecast for 2021 on Friday.
 
"It has been another difficult quarter operationally and ... we recognize the opportunity to raise our performance," said chief executive officer Jakob Stausholm.
 
According to the latest forecast by the company, 320 million tonnes (mt) to 325 million tonnes (mt) of Pilbara iron ore shipments in 2021 is now expected by the miner compared to its past forecast range of shipments of between 325 mt to 340 mt.
 
If this forecast downgrade turns out to be true, the mining giant is slated to give up its position as the largest iron ore producer in the world to Brazilian rival Vale S.A.
 
"Another disappointing quarter for Rio Tinto as the company struggles to regain operational momentum," broker RBC said in a research note.
 
The 1issues faced by the company have been compounded by a tight global supply chain, Rio said, while the company can end up facing further volatility which could be sparked because of the headwinds from China's regulatory tightening.
 
After it reached a record high in the middle of May this year, there has been an almost 50 per cent reduction in the global prices of iron ore. Demand for the metal has been hit by lowering of steel output in China as well as a significant slowdown in the property activity in the Chinese market because of a significant regulatory crackdown by authorities in the country. ,
 
Despite the headwinds, the total shipment made by Rio of the steel-making commodity during the three months ended Sept. 30 was ay 83.4 mt, which was 2 per cent more than what it had shipped in the same period a year ago - at 82.1 mt.
 
But the company also reported a 4 per cent lower production of Pilbara iron ore primarily because of heritage management, replacement of brownfield mining activity tie-ins, and delays in project completion.
 
A leadership overhaul of the company and a national inquiry was forced upon the company because of the destruction of the 46,000 year-old Juukan Gorge rock shelters by Rio last year.
 
Rio also pushed back the beginning of production at Mongolia's Oyu Tolgoi copper mine by a period of three months, to January 2023. The project's additional funding requirements had risen to $3.6 billion, estimated Turquoise Hill Resources, a joint venture partner from Canada, on Thursday.
 
The Mongolian government has been irritated by the constant delays in the development of Rio’s copper mine in the country – which will be one of the largest copper mines in the world. A 34 per cent stake in the project is owned by the Mongolian government. There has also been a dispute between Rio and Turquoise Hill over the funding of the project.
 
(Source:www.investing,com)


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