The Rio Tinto Limited (ASX: RIO) share price is on the slide on Wednesday.
At the time of writing, the mining giant’s shares are down 2.5% to $118.62 following the release of its first quarter production update.
First quarter production highlights
For the three months ended 31 March, Rio Tinto’s production was largely down across the board both in comparison to the prior corresponding period and the previous quarter. This explains much of the weakness in the Rio Tinto share price today.
The company’s Pilbara operations had a challenging first quarter. Rio Tinto produced 71.7 million tonnes of iron ore, which was 6% lower than the first quarter of FY 2021. Pilbara shipments were 71.5 million tonnes, 8% lower year on year.
Positively, the company expects increased production volumes and improved product mix in the second half with the commissioning and ramp up of Gudai-Darri, commissioning of the Robe Valley wet plant and improved mine pit health.
It was a similar story for its aluminium production, which at 0.7 million tonnes was 8% lower than the first quarter of FY 2021. This was due to reduced capacity at its Kitimat smelter following a strike.
Finally, mined copper production came in at 125,000 tonnes, which was 4% higher than the first quarter of FY 2021. This was driven by higher recoveries and grades at Kennecott, which was partly offset by lower grades at Oyu Tolgoi and lower throughput at Escondida.
Rio Tinto’s Chief Executive, Jakob Stausholm, was a touch disappointed with the company’s performance during the quarter but remains positive on the future. He said:
“Production in the first quarter was challenging as expected, re-emphasising a need to lift our operational performance. We launched seven more deployments of the Rio Tinto Safe Production System, building on the achievements from the previous rollouts. As we ramp up Gudai-Darri, our iron ore business will have greater production capacity and be better placed to produce additional tonnes of Pilbara Blend in the second half.”
Despite this weak first quarter, management has reiterated its production guidance for FY 2022.
This includes iron ore shipments of 320Mt to 335Mt, aluminium production of 3.1Mt to 3.2Mt, and mined copper production of 500kt to 575kt.
This compares to FY 2021’s production of 322Mt, 3.2Mt, and 494kt, respectively.
Also remaining unchanged is the mining giant’s cost guidance. It expects iron ore unit costs of $19.50 to $21.00 per tonne and copper C1 unit costs of 130 to 150 US cents per pound.
Though, judging by the Rio Tinto share price performance today, some investors may have doubts over this guidance.