Key points
- Rio Tinto had a tough quarter with shipments and production down year on year
- Iron ore shipments for Q4 fell short of the market's expectations
- However, the mining giant's FY 2022 guidance was largely in line
The Rio Tinto Limited (ASX: RIO) share price will be one to watch on Tuesday.
This follows the release of the mining giant's fourth quarter update this morning.
How did Rio Tinto perform in the fourth quarter?
For the three months ended 31 December, Rio Tinto reported a 5% decline in Pilbara iron ore shipments to 84.1Mt. This brought its full year shipments to 321.6Mt, which was down 3% year on year.
Unfortunately, this appears to have fallen short of expectations, which could weigh on the Rio Tinto share price. For example, the team at Goldman Sachs was forecasting iron ore shipments of 88.9Mt for the three months.
Management blamed its soft FY 2021 shipments on above average rainfall in the first half of the year, cultural heritage management, and delays in growth and brownfield mine replacement tie-in projects.
Elsewhere, Rio Tinto's mined copper came in at 132kt for the three months. This was flat on the prior corresponding period and a touch short of Goldman's forecast of 133kt. This led to full year mined copper of 494kt, which is a 7% reduction on FY 2020's production. This reflects lower recoveries and throughput at Escondida as a result of the prolonged impact of COVID-19.
It was a similar story for aluminium, which was down 7% in the fourth quarter to 757kt. This ultimately put the miner's giant full year production into the red for the year, down 1% to 3,151kt. This was driven by reduced capacity at its Kitimat smelter in British Columbia following a strike which commenced in July.
In fact, there was not a single commodity that achieve production growth in FY 2021. Bauxite was down 3% to 54.3Mt, titanium dioxide slag was down 9% to 1,014kt, and iron ore pellets fell 6% to 9.7Mt.
What about FY 2022?
One thing that could support the Rio Tinto share price today is its guidance for potential production growth in FY 2022. Among the highlights, management is guiding to iron ore shipments of 320Mt to 335Mt and mined copper production of 500kt to 575kt.
This is broadly in line with what Goldman Sachs was forecasting. It pencilled in iron ore shipments of 330Mt and mined copper production of 550kt.
Rio Tinto's Chief Executive, Jakob Stausholm, said: "In 2021 we continued to experience strong demand for our products while operating conditions remained challenging, including due to prolonged COVID-19 disruptions. Despite this, we progressed a number of our projects, including the Pilbara replacement mines, underlining the resilience of the business and the commitment and flexibility of our people, communities and host governments. We are seeing some initial positive results from the implementation of the Rio Tinto Safe Production System, which we will significantly ramp up in 2022, as we continue to work hard to improve our operational performance to become the best operator."
