Africa not W Australia to grow Rio Tinto iron ore

Spanish Market: Metals
16/01/24

UK-Australian mining firm Rio Tinto shipped 331.81mn t of iron ore from Western Australia (WA) in 2023, close to the middle of its guidance of 323mn-338mn t for 2024 as it focuses on its African growth plans.

Rio Tinto expects to start iron ore production from its 60mn t/yr Simfer joint venture in Guinea in 2025. Rio Tinto's share will add 27mn t/yr to its sales after a 30-month ramp-up ends in 2028. This is more than Rio Tinto has grown its WA iron ore output in almost a decade. It shipped 319mn t on a 100pc ownership basis from WA in 2015, just 13mn t/yr lower than in 2023.

Guinea provides iron ore growth and higher-grade iron ore more suitable for "green" iron/steel production than Rio Tinto's current WA offerings. Low-grade SP10 iron ore made up a record 14pc of its WA sales in 2023, up from 11pc in 2022 and zero in 2015. The proportion of the high-grade Pilbara Blend fell to 61pc in 2023 from 64pc in 2022 and 73pc in 2015.

The firm hopes that its 40mn t/yr Rhodes Ridge project in WA will return the proportion of Pilbara Blend to more than 85pc of sales and could see it reach its mid-term target of 345mn-360mn t from WA. But this is only expected to produce ore by the end of the decade, with a $77mn pre-feasibility study launched in December and due to be finished in 2025. By then the firm will have much clearer idea of how WA stacks up against Guinea as an investment opportunity, with Simfer scheduled to start production.

Rio Tinto's WA iron ore shipments were 2pc higher in October-December 2023 than in July-September, but 2pc below October-December 2022 (see table). Yet SP10 fines sales more than doubled and were ahead by 26pc in the same comparisons.

Yandigoogina sales fell by 6pc in 2023 compared with 2022, as the mine is depleted and replaced by the 43mn t/yr Gudai Darri mine.

Rio Tinto received an average price of $109.60/dry metric tonne (dmt) fob Pilbara ports in July-December 2023, up from $107.20/dmt in January-June 2022. The Argus ICX 62pc Fe spot price averaged $121.47/dmt cfr Qindao and $118/dmt over the corresponding periods.

The Iron Ore Company of Canada (IOC), in which Rio Tinto owns 59pc, maintained sales at 16.3mn t of concentrate and pellet in 2023, but is expected to produce as much as 19.5mn t in 2024.

By Jo Clarke

Rio Tinto's iron ore shipments					mn t
	Oct-Dec '23	Jul-Sep '23	Oct-Dec '22	2023	2022

Western Australian (100pc basis)
Pilbara Blend Lump	17.35	17.78	18.15	71.63	66.68
Pilbara Blend Fines	29.84	31.01	38.83	129.87	137.18
Robe Valley Lump	2.84	2.45	2.35	9.44	7.87
Robe Valley Fines	5.76	5.11	5.46	19.83	17.6
Yandicoogina Fines (HIY)	13.63	13.67	14.66	53.54	56.88
SP10 Lump	4.62	4.18	2.82	12.14	12.75
SP10 Fines	12.21	9.7	5.06	35.35	22.67
Total WA iron ore shipments	86.25	83.89	87.35	331.8	321.64
IOC (100pc basis)
IOC shipments	4.37	3.91	3.76	16.33	16.26
Source: Rio Tinto

Iron ore prices ($/dmt)

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