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Rio Tinto on watch after downgrading Pilbara iron ore shipments guidance

ASX iron ore miners

The Rio Tinto Limited (ASX: RIO) share price will be one to watch on Tuesday.

This morning the mining giant provided the market with an update on the impact of Tropical Cyclone Damien on its iron ore operations in the Pilbara.

What did Rio Tinto announce?

According to the release, Rio Tinto’s iron ore operations in the Pilbara region of Western Australia are progressively resuming following the passing of Tropical Cyclone Damien.

The cyclone has negatively impacted Rio Tinto by causing infrastructure damage across its entire Pilbara network. This includes impact to infrastructure such as access roads, electrical and communications infrastructure, and employee accommodation.

Management warned that all of Rio Tinto’s mine sites experienced some form of disruption and will take time to return to normal operations.

Iron ore shipments guidance downgrade.

As a result of the disruption that its operations have faced, Rio Tinto has been forced to downgrade its Pilbara shipments for 2020.

Management now expects Pilbara shipments to be in the range of 324 million tonnes and 334 million tonnes (100 per cent basis) this year. This compares to its previous guidance of between 330 million tonnes and 343 million tonnes. Which represents a 2% downgrade on the low end of its guidance range and a 2.6% downgrade at the high end of its range.

The company advised that it is working with its customers to minimise any disruption in supply. But it reiterated that safety remains its top priority as it ramps up operations and undertakes the necessary remediation work.

This news could give the Fortescue Metals Group Limited (ASX: FMG) share price a boost on Tuesday. Given how tight supply and demand have been over the last 12 months, any supply disruptions could be supportive of higher iron ore prices in the coming months.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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