Rio Tinto is maintaining its 2020 production guidance for ore, bauxite, alumina and aluminium but expects mined and refined copper to drop further amid COVID-19 restrictions and earthquake repairs at a plant in the US.
The miner has also slashed its capital expenditure from $US7 billion to between $US5 billion to $US6 billion in 2020, partly due to coronavirus constraints, and partly due to the favourable currency impact from the strong US dollar.
The company’s ASX-listed shares were up by 3.53 per cent to $91.68 by 1159 AEST amid a 2.4 per cent rally for the benchmark ASX/200.
Rio said all major projects progressed well in the first quarter but are now being affected by COVID-19 restrictions.
“The team is investigating ways to mitigate COVID-19 impacts including those associated with roster changes, travel restrictions and the design and fabrication of long lead items in China and Europe,” Rio said in a release on Friday.
“Whilst it is too early to estimate, the restrictions are likely to have some impact on our progress.”
Rio’s first quarter update reported that Pilbara iron ore output and shipments are higher compared to a year ago, even though both have eased from the last three months of 2019.
The company said demand in China continues to recover but in the rest of the world the outlook is more uncertain.
“Demand for the high-quality iron ores we produce remained strong in the first quarter of 2020, mainly driven by a combination of seaborne supply disruptions and solid demand from China’s steel mills despite COVID-19 impacts,” Rio said.
The company has lost 8.6 per cent of its value in 2020 compared to a 17 per cent fall for the wider market.
On Friday it said Pilbara iron ore shipments of 73 million tonnes was 5.0 per cent higher than the first quarter of 2019, driven by a strong recovery across the network in March following tropical cyclone Damien in February.
Shipments are, however, down 16 per cent on Q4 2019.
Iron ore production rose 2.0 per cent to 77.8 million tonnes for the three months but are down 7.0 per cent on Q4 in 2019.
Mined copper production of 133 thousand tonnes was 8.0 per cent lower than the same period in 2019, reflecting anticipated lower copper grades, partially offset by higher throughput.
Mined and refined copper guidance has also been lowered due to a potential reduction in second half output at Escondida in Chile from coronavirus measures and the earthquake repairs at the Kennecott plant in Utah.
Titanium dioxide slag guidance is also expected to be at the lower end of the prior guidance range due to COVID-19 restrictions instructed by the governments in Quebec and South Africa.
Rio said capital expenditure originally planned for 2020 may subsequently flow into 2021 and 2022, with a further update to come.
Pilbara iron ore 2020 unit cost guidance of $US14 to $US15 per tonne remains unchanged and Copper C1 unit cost guidance in 2020 is unchanged at 120 US cents to 135 US cents a pound.