By Ambar Warrick
Investing.com-- Australian shares of mining major Rio Tinto lagged their local peers on Tuesday after the firm forecast annual iron ore shipments at the lower end of its guidance, while also logging a fall in sales amid weakening industrial demand, particularly in major buyer China.
Rio Tinto shares (ASX:RIO) fell 0.1% to A$94.040 by 20:02 ET (00:02 GMT), compared to a 1.4% jump in the ASX 200 benchmark index. Rio’s bigger peer BHP Group Ltd (ASX:BHP), the world’s largest miner, rose 0.9%, and is set to report its September quarter production figures on Wednesday.
Rio Tinto (NYSE:RIO) said annual iron ore shipments are likely to be closer to the lower end of its 2022 guidance of 320 million tons (Mt) to 335 Mt, and that its outlook was also dependent on whether it could scale up operations at two nascent projects.
The iron ore miner shipped 82.9 Mt of the steelmaking material in the quarter to September 30, down from 83.4 Mt shipped last year. Still, shipments rose 4% from the prior quarter.
Rio Tinto also mined 138,000 tons of copper during the quarter, up 10% from last year and 9% from the prior quarter. But it was unclear how much of the red metal it shipped.
The miner is struggling with rising costs of mining and declining prices of its commodities, as it contends with slowing industrial activity across the globe. Weakening trends in China, Rio Tinto’s largest customer, also saw the company log weaker-than-expected interim results in August, while it also halved its interim dividend.
Adding more pressure to iron ore prices, Brazilian major Vale (BA:VALE) logged higher than expected iron ore production in the third quarter, indicating more supply amid waning demand for the steelmaking material.
Rio Tinto warned that commodity markets were likely to face more downside pressure in the near-term, especially in the face of growing recession risks and a slowdown in major consumer China. This follows a similar warning from Chief Executive Jakob Stausholm earlier this year.
Still, Rio Tinto intends to proceed with a plan to “modernise” a nearly 50-year-old agreement over the Rhodes Ridge iron ore project. The firm also has ongoing plans to shore up lithium and copper production, citing an eventual increase in demand from the electric vehicle industry.