Rio Tinto (RIO, Financial), the world's largest iron ore exporter, reported a decrease in iron ore shipments for the fourth quarter due to weak demand and reduced production at some mines. The company shipped 85.7 million tons of iron ore, a 1% decline compared to the previous year. Despite this, Rio Tinto's copper production surged by 26% thanks to higher-grade copper from its Chilean Escondida mine and increased output from the Oyu Tolgoi project in Mongolia.
The company noted an increase in steel exports to other Asian countries, partially offsetting the decline in construction demand. Analysts from Goldman Sachs warned that rising inflation could impact global economic growth and, consequently, iron ore prices. For 2024, iron ore has been one of the worst-performing commodities, with prices dropping 28%. However, after falling below $90 per ton at the end of September, prices gained support, closing at $101.45 per ton in Singapore recently.
Rio Tinto faces challenges in maintaining the quality of its iron ore business in the Pilbara region of Western Australia. The company plans to develop new mines, including the Western Range mine set to begin production this year. However, it previously stated that a new mine must be operational each year until 2030 to match current output levels. The company also plans to develop at least four new large mines in the Pilbara region, with the Rhodes Ridge project targeting an initial capacity of 40 million tons.
Outside Australia, the Simfer project in Guinea is expected to start production later this year, eventually exporting 60 million tons of iron ore annually. Rio Tinto remains a major aluminum producer and is expanding its copper assets. The company will release its fourth-quarter results on February 20.
