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RIO TINTO GROUP

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Delayed Australian Stock Exchange  -  02:10 2022-07-01 am EDT
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Rio Tinto sees soft 2022 iron ore shipments on labour issues, project delays

01/17/2022 | 09:25pm EDT
FILE PHOTO: A sign adorns the building where mining company Rio Tinto has their office in Perth, Western Australia

(Reuters) - Rio Tinto forecast slightly weaker-than-expected 2022 iron ore shipments on Tuesday, citing tight labour market conditions and production delays from the new greenfields mine at Gudai-Darri project.

The world's biggest iron ore producer said it expects to ship between 320 million and 335 million tonnes (Mt) in 2022 from the Pilbara region in Western Australia, a forecast with a mid-point below RBC estimate of 332 Mt and UBS' estimate of between 330 Mt and 340 Mt.

Rio shipped 321.6 Mt of the steel-making commodity last year, down 3% from 2020.

Shares of the global miner fell as much as 1.9% to A$107.91, but reversed course to trade marginally higher, as at 0117 GMT.

The delay in production from the new greenfields mine as well as labour shortages in Western Australia due to prolonged pandemic-led interstate border closures also resulted in lower iron ore shipments from the Pilbara region.

"Rio Tinto's operations continue to meander and mine capacity issues in iron ore are likely to weigh again in 2022, albeit on an already reduced forecast production profile," analysts at RBC Capital Markets said in a note.

"Although iron ore prices have provided the shares some solace in recent weeks, we continue to see a challenging outlook for iron ore over the course of 2022."

Even as Rio said it was "encouraged" by growth prospects in 2022, it cautioned that potential disruption from surging COVID-19 cases and any geopolitical tensions could take a toll.

"Guidance assumes development of the pandemic does not lead to government-imposed restrictions and widespread protracted cases ... which could result in a significant number of our production critical workforce and contractor base being unable to work," the miner said in a statement.

"This risk is exacerbated globally by tight labour markets and supply chain delays."

China's debt-ridden property sector also poses some risk as easing construction activity weighed on demand for raw materials, including iron ore, prices of which nearly halved from a peak hit in May of last year.

Meanwhile, even as the global miner builds its battery materials business with the recent acquisition of the Rincon lithium project in Argentina, it was planning to pause similar work in western Serbia amid protests by green groups across the country.

The iron ore producer shipped 84.1 Mt of the commodity in the three months ended Dec. 31, roughly in line with UBS forecast of 84 Mt and topped RBC estimate of 82.6 Mt.

(Reporting by Sameer Manekar and Harish Sridharan in Bengaluru; Editing by David Gregorio, Bill Berkrot and Sherry Jacob-Phillips)

By Sameer Manekar


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
EURO / ARGENTINE PESO (EUR/ARS) -0.30% 130.8131 Delayed Quote.11.84%
RIO TINTO GROUP -2.30% 100.34 Delayed Quote.2.59%
RIO TINTO PLC -1.67% 4834.5 Delayed Quote.0.76%
US DOLLAR / ARGENTINE PESO (USD/ARS) 0.19% 125.45 Delayed Quote.21.78%
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Financials (USD)
Sales 2022 58 904 M - -
Net income 2022 18 506 M - -
Net cash 2022 2 823 M - -
P/E ratio 2022 5,41x
Yield 2022 14,0%
Capitalization 98 850 M 97 863 M -
EV / Sales 2022 1,63x
EV / Sales 2023 1,83x
Nbr of Employees 49 000
Free-Float 65,4%
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Mean consensus OUTPERFORM
Number of Analysts 23
Last Close Price 59,74 $
Average target price 76,50 $
Spread / Average Target 28,1%
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Managers and Directors
Jakob Stausholm Chief Executive Officer & Executive Director
Peter Lloyd Cunningham Chief Financial Officer & Executive Director
Dominic S. Barton Chairman
Mark Davies Chief Technical Officer
Arnaud Soirat Chief Operating Officer
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