Rio Tinto scales back, lowers iron ore guidance for 2015
Mining powerhouse Rio Tinto is scaling back on its 2015 iron ore guidance, cutting exports from 350 million tons to 340 million tons due to weather conditions in the outback.
The Anglo-Australian miner said "uncharacteristically severe weather" was to blame for the reduction as it expects to ship less iron ore than initially thought from its networks of mines in northwest Australia this year.
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"Heavy inland rains reduced truck utilization, resulting in lost production at the mines and impacting [on] the ability to rail planned tons [to port]," the company said last week.
“Around seven million tons of shipping capacity was lost directly at the ports due to uncharacteristically severe weather.”
Despite the reduction, Rio produced 79.7 million tons of iron ore and shipped 81.4 million tons in the June quarter.
Rio Tinto, the world’s lowest-cost producer of iron ore, said its ultimate goal is to produce 360 million tons annually from Western Australia’s Pilbara region, which could occur sooner than thought. The company said the infrastructure expansion to facilitate the increased capacity in Pilbara has now been completed.
"Our combination of world-class assets, financial strength and operating and commercial excellence provides a sound base to continue to generate sustainable returns for our shareholders," the company said in a statement.
“The focus is now to ramp up the new equipment to full capacity and generate maximum value from the integrated system.”
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To achieve its new guidance set last week, Rio Tinto will need to accelerate its export rate in the second half of 2015. According to Citi analyst Clarke Wilkins, it will be a challenge.
"It will still be a challenge for them to achieve guidance for the second half of the year but they should be able to get there," he said.
In July, prices for iron ore dipped into the danger zone for most miners, falling below $50 a ton.
Lynas revenue jumps 21% as rare earth prices jump
Australian miner Lynas Rare Earths posted a 20.6% rise in revenue in the March quarter as selling prices for the key metals it mines hit record highs amid strong demand, particularly for neodymium and praseodymium (NdPr).
NdPr is used in magnets for electric vehicles and windfarms, in consumer goods like smartphones, and in military equipment such as jet engines and missile guidance systems.
The company said it plans to maintain production at 75% however, as it seeks to continue to meet covid-19 safety protocols and grapples with shipping difficulties. Shares in Lynas fell 6.1% after the results.
“They have faced a few logistics issues, and it would be good to know when they are going to start lifting their utilisation rates a bit,” said portfolio manager Andy Forster of Argo Investments in Sydney.
“Pricing has been pretty strong although it may have peeled back a bit recently. I still think the medium, long-term outlook is pretty good for their suite of products.”
Lynas post ed revenue of A$110mn ($85.37mn) for the three months to the end of March, up from A$91.2mn a year earlier as prices soared.
It said its full product range garnered average selling prices of A$35.5/kg during the March quarter, up from $23.7 in the first half of the financial year. “While the persistence of the covid crisis, especially in Europe, calls for careful forecasts for our business ahead, we see the rare earth market recovering very quickly,” said Lynas, the world’s largest rare earths producer outside China.
Freight demand has spiked during the pandemic, while the blockage of the Suez Canal in March delayed a shipment to April.
Lynas’ output of 4,463 tonnes of rare earth oxide (REO) during the quarter was marginally lower than 4,465 tonnes from a year earlier.