Rio Tinto bolsters WA iron ore shipments

UK-Australian iron ore mining firm Rio Tinto has recovered from its Pilbara port issues with strong shipments from its Cape Lambert facilities over the past four months and signs of improvements at the port of Dampier.

The four major Western Australian (WA) iron ore companies loaded ships with lower deadweight tonnage (dwt) capacity in the week to 7 September at 17.6mn dwt, compared with 18.45mn dwt in the previous week and in line with the average of 17.57mn dwt/week for the year to date. But ships loaded by Rio increased in capacity to 7.74mn dwt, from 6.77mn dwt the previous week and above an average of 6.55mn dwt/week for the year to date.

Higher shipments from Rio and Australian independent Fortescue Metals in the most recent week were offset by a fall in shipments from UK-Australian firm BHP and Australian independent Roy Hill.

Rio has struggled to maintain its iron ore shipments this year, following a fire at its Cape Lambert facilities in January and damage caused by Cyclone Veronica at its Dampier port in March. These problems contributed to Rio cutting its production guidance for 2019 to 320mn-330mn t in June, having already reduced it to 333mn-343mn t from 338mn-350mn t in April.

Rio Tinto has loaded ships with a capacity of 235.97mn dwt in the year to 7 September, according to early shipping data. The initial shipping data overestimates actual iron shipments by around 5pc because it is the maximum capacity of the ships loaded. For instance, initial shipping data indicates Rio loaded ships with a capacity of 90.89mn dwt in April-June, but the firm officially shipped 85.4mn t of iron ore during this period, according to Rio's quarterly report.

This suggests Rio has loaded around 224mn t of iron ore in the year to 7 September, leaving it with a target of around 96mn t for the remaining 16 weeks of the year to meet the bottom of its guidance. This would imply shipping loadings of around 6.25mn dwt/week for the remainder of the year to reach the bottom of its target, which is significantly below the weekly average achieved in the disrupted first half.

Rio Tinto usually has a stronger second half of the year than the first as it suffers from fewer weather disruptions associated with WA's cyclone season, which runs from December-April. But it has flagged a major rail maintenance programme for October that may affect shipments that month. Still, Rio Tinto looks on track to easily meet the bottom of its 320mn-330mn t guidance for 2019.

WA iron ore shipments mn dwt