The Rio Tinto Limited (ASX: RIO) share price could come under pressure on Thursday after the mining giant revealed that it has downgraded its iron ore shipments guidance.
Overnight in London the company’s UK-listed shares finished the day over 4.5% lower.
What has happened?
In a release to UK investors yesterday the miner revealed that its Rio Tinto Iron Ore business is currently experiencing mine operational challenges, particularly in the Greater Brockman hub in the Pilbara.
This has resulted in a higher proportion of certain lower grade products, partly to protect the quality of its flagship Pilbara Blend.
In light of this, the company has conducted a review of its mine plans, resulting in guidance of Pilbara shipments for 2019 being revised to between 320 million tonnes and 330 million tonnes.
This compares to its previous guidance of between 333 million tonnes and 343 million tonnes.
Furthermore, given the change in its volume guidance, the company advised that unit costs will be updated in the second quarter operations review scheduled for release on July 16.
Vale to restart Brucutu operation.
Also contributing to Rio Tinto’s share price weakness, and likely to weigh on fellow iron ore producers BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) today, was an announcement out of Brazilian iron ore giant Vale overnight.
According to Reuters, Vale has won court approval to restart its key Brucutu operation and intends to do so within 72 hours.
In light of this, the miner has reaffirmed its 2019 iron ore and pellets sales guidance of 307 million to 332 million tonnes and suggested that it is likely to hit the midpoint of its guidance range.
The Brucutu operation was closed in February at the request of prosecutors in the state of Minas Gerais after a tailings dam burst in the town of Brumadinho.
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