Rio Tinto, the country’s largest iron ore mine, has downgraded its full-year target for shipments of steelmaking material from Western Australia.
The mining giant told investors on Friday that it now expected to ship between 320 million tonnes and 325 million tonnes of iron ore over the 12 months to 31 December, after previously targeting up to 340 million tonnes.
Rio attributed the downgrade to delays in the commissioning of new greenfield mines and mine expansion projects due to the “tight labor market in WA”.
Mining executives say the state’s labor shortage has been exacerbated by coronavirus-related travel restrictions that reduce mobility between states while miners have to compete for skilled and experienced workers amid a state-sponsored construction boom on the east coast.
Rio Tinto CEO Jakob Stausholm said on Friday that the third quarter had demonstrated the resilience of Rio’s workforce in dealing with ongoing COVID-19 challenges, but acknowledged that it had been “another difficult quarter operationally”.
“Despite improvements over the previous quarter, we recognize the opportunity to increase our performance,” Stausholm said. “We have therefore modestly adjusted our guidance.”
Rio’s iron ore shipments in the third quarter were 83.4 million tons, an increase of 9 percent over the previous quarter, the company said. The result was 4 percent lower than at the same time last year, partly due to a slowdown in production focusing on original cultural heritage issues after the company’s fateful destruction of the old Juukan Gorge cliffs.
Rio Tinto delivered a record first-quarter result of $ 12.1 billion. USD for six months to July 31 on the back of a stunning rise in the price of iron ore. The price jump was supported by an aggressive infrastructure flash in China, which fueled the demand for steel, while prolonged mining disruptions pulled supply out of Brazil.