Rio Tinto is nearly halfway through its 2022 financial year and the major iron ore exporter has left its key production forecasts for the year unchanged, along with its projected investment spend for the 12 months.
In a statement talking up its new Gudai-Darri iron ore mine in the Pilbara (the first in a decade), Rio said the mine’s commissioning and ramp-up is expected to increase its iron ore production volumes and improve product mix from the Pilbara in the second half of this year.
Rio said that its full-year shipments guidance for 2022 remains at 320 to 335 million tonnes (on a 100% basis) subject to risks around the ramp up of new mines, weather and management of cultural heritage.
The company produced 319.7 million tonnes of iron ore in 2021, down 4% from 2020.
The fact that Rio is maintaining 2022 production guidance would suggest demand for the company’s iron ore products in China hasn’t been hit by the Covid lockdowns, or if it has, the impact has been small and Rio thinks it can recover whatever lost tonnage is involved, later in the year.
“With an expected life of more than 40 years and an annual capacity of 43 million tonnes, Gudai-Darri will underpin future production of Pilbara Blend product. A feasibility study to support an expansion of this new hub is also progressing,” Rio said.
The Pilbara Blend is a 62% Fe fines product that is the key pricing base for iron ore deals around the globe every day.
The new mine has proven reserves of 286 million tonnes of ore at a Fe grade of 62.2%. Including probable reserves, there’s a total of 561 million tonnes at 61.8% Fe.
The WA Government’s Environmental Authority (EPA) has approved Rio’s applications to expand the iron-ore hub in the Greater Paraburdoo region of the Pilbara.
Under the proposals, new deposits will be developed at Western Range, including above and below water table mining, and the extension of existing operations and infrastructure at Paraburdoo and Eastern Range.
The EPA’s green light is the first awarded to Rio since 2019, when blasting operations destroyed the Juukan Gorge rock shelters.
Rio said on Wednesday the first autonomous trains loaded with ore from Gudai-Darri’s process plant have travelled the new 166-kilometre rail line that connects to Rio’s existing rail and port infrastructure.
“Production from the mine will continue to ramp up through the remainder of this year and is expected to reach full capacity during 2023,” the miner said on Wednesday.
The mine’s cost is estimated to be $US3.1 billion ($A4.3 billion).
“As disclosed in February, the company’s replacement projects in the Pilbara, including Gudai-Darri, were subject to potential capital increases of approximately 15% due to ongoing COVID-19 restrictions, including labour access and supply chain quality issues. Group capital expenditure guidance for 2022 is unchanged at around $8 billion.”
Helping support Rio Tinto’s carbon emission reduction targets, Gudai-Darri will be powered by a 34-megawatt solar farm that is expected to supply about a third of the mine’s average electricity demand once construction is complete in August.
Together with a new lithium-ion battery energy storage system in Tom Price, the solar plant is estimated to reduce annual carbon dioxide emissions by about 90,000 tonnes compared to conventional gas powered generation.
Rio shares eased a tiny 0.08% to $110.96 on a day when the ASX 200 dropped 85 points (1.27%) in a late slide.