By Harish Sridharan
(Reuters) -Rio Tinto forecast annual iron ore shipments at the lower end of its guidance on Tuesday, after third-quarter iron ore deliveries fell amid weak global demand, particularly in top metals consumer China.
Rio has been battling with a surge in production costs, while iron ore prices are on track to end 2022 at their lowest in the last three or four years, as China and Europe cut steel output amid mounting pressure from additional supply.
Weakness in prices and cooling China demand had led Rio to more than halve its interim dividend payout in July.
The miner said it now expects annual iron ore shipments at the low end of its forecast range of 320 million tonnes (Mt) to 335 Mt, adding that its outlook was dependent on ramping-up the Gudai-Darri and Robe Valley projects, and the availability of skilled labour.
“Rio Tinto’s recovery in iron ore and maintaining the annual guidance should come as a relief to investors, even if it is most likely going to only hit the low end,” analysts at RBC Capital Markets said.
Rio shares reversed their initial gains and were last down 0.5%, compared to the benchmark index’s 1.3% jump.
The world’s biggest iron ore producer shipped 82.9 Mt of the steel-making commodity in the three months ended Sept. 30, compared with 83.4 Mt a year earlier.
Rio, however, said that on a quarter-on-quarter basis, shipments rose 4%, despite two rail outages, including one on the Guidai-Darri line.
The company raised annual cost estimates for copper to between 150 cents and 170 cents per pound from 130 cents to 150 cents a pound, but lowered its annual refined copper production guidance to 190,000 to 220,000 tonnes, from 230,000 to 290,000 tonnes.
It also lowered its capital investments for 2022 by $500 million to $7.0 billion, due to a stronger U.S. dollar and “reassessment on timing of decarbonisation investment”.
Separately, Rio said it would “modernise” a nearly 50-year-old agreement with Wright Prospecting to develop the Rhodes Ridge iron ore project, and aims to operationalise a plant by this decade end, with an initial annual capacity of up to 40 Mt.
Rio last month said it would team up with China Baowu Steel Group to develop an iron ore project for $2 billion as it looks to prop up its production from the Pilbara region.
BHP Group is expected to report its first-quarter production results on Wednesday.
(Reporting by Harish Sridharan and Himanshi Akhand in Bengaluru; Editing by Vinay Dwivedi and Rashmi Aich)