Rio Tinto squeezes its iron ore shipment forecast for 2021

Highlights

  • Rio Tinto Group (ASX:RIO) has reduced its production forecast for iron ore shipments for 2021.
  • The downgrade in the shipments of the company has put Rio on course to lose its spot as the world’s leading iron ore producer.
  • Iron ore prices squeezed to nearly half, relative to the peaks in May.

Mining giant Rio Tinto Group (ASX:RIO) has reduced its production forecast for iron ore shipments for 2021 on the back of labour shortage in Western Australia. The shortage has also delayed the completion of new greenfield mine at Gudai-Darri.

Rio Tinto squeezes its iron ore shipment forecast for 2021

The multi-commodity miner expects the 2021 iron ore shipments to land between 320-325 million tonnes, significantly down from the previous year’s range of 325-340mt.

The downgrade in the shipments of the company has put Rio on course to lose its spot as the world’s leading iron ore producer against its rival Vale SA.

Labour shortage

A tight global supply chain added to the difficulties of the company which is expected to become severe followed by the tightening of country’s regulatory body that could spark further volatility.

Iron ore prices squeezed to nearly half, relative to the peaks in May. However, rising environmental concerns in China coupled with slowdown in property activity due to regulatory crackdown.

Falling iron ore

Falling iron ore | Source: Copyright © 2021 Kalkine Media

Iron ore with 63.5% iron content tumbled below US$120 per tonne after reaching US$129 per tonne in mid-October. The commodity last traded at US$113 per tonne, down 4.25% as of Friday.

Even after recording a massive fall in iron ore prices in the last quarter, the company shipped 83.4mt of iron ore till 30 September, higher that last year’s shipment of 82.1mt.

However, the Pilbara’s production during the last quarter was 4% lower, relative to the last year.

Bottom Line

Rio Tinto Group (ASX:RIO) has reduced its production forecast for iron ore shipments for 2021 on the back of labour shortage in Western Australia.

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