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Rio Tinto (RIO) '21 Iron Ore Shipments & Production Down Y/Y

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Rio Tinto plc (RIO - Free Report) produced 84.1 million tons (Mt) of iron ore in the fourth quarter of 2021, taking the year’s total to 319.7 million tons (100% basis). This was 4% lower than the prior year primarily due to above-average rainfall in the first half of the year, cultural heritage management and delays in growth and brownfield mine replacement tie-in projects. Ongoing travel restrictions due to COVID-19 and a tight labor market in Western Australia impacted the company’s ability to access experienced contractors and particular skill sets.

Due to these headwinds, Rio Tinto had stated that its shipments for the year would be near the lower end of the range of its previous guidance of 325 Mt to 340 Mt in 2021. The company’s shipments in 2021 were 321.6 Mt, down 3% from 2020.

Coming to the rest of Rio Tinto’s portfolio, bauxite production was 54.3 million tons in 2021, which was 3% lower year over year, mainly due to severe wet weather in the first quarter. Aluminium production was down 1% year over year to 3.2 million tons in 2021 owing to reduced capacity at the Kitimat smelter in British Columbia. Mined copper production was around 494,000 tons, 7% lower than 2020. Lower recoveries and throughput offset higher recoveries and grades at Oyu Tolgoi and Kennecott at Escondida as a result of the prolonged impact of COVID-19. In 2021, titanium dioxide slag production was 1,014 thousand tons, 9% lower than 2020. Diamond production was 3.8 million carats, 3% higher than in 2020.

Few Key Developments

In November, Rio Tinto became the sole owner of the Diavik Diamond Mine in the Northwest Territories of Canada, thus fortifying its position as a leader in the Canadian diamond industry.

On Dec 21, 2021, Rio Tinto announced that it has entered into a binding agreement to acquire the Rincon lithium project in Argentina from Rincon Mining for $825 million. Rincon is one of the largest undeveloped lithium brine projects globally.

Guidance for 2022

Rio Tinto expects Pilbara iron ore shipments (100% basis) in the range of 320 to 335 Mt in 2022. The mid-point of the range indicates a year-over-year rise of 2%. Bauxite production is expected to be 54-57 Mt. Alumina production is anticipated between 8.0 Mt and 8.4 Mt. Aluminium production is expected in the band of 3.1 Mt to 3.2 Mt. Mined copper is forecast in the range of 500 kt to 575 kt. Refined copper is predicted between 230 kt and 290 kt. Diamonds production is projected to be 5.0-6.0 million carats. Titanium dioxide slag production is expected to be 1.1-1.4 Mt.

Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

In the past year, shares of Rio Tinto have fallen 6.3%, compared with the industry’s decline of 1%.

Zacks Rank

Rio Tinto currently has a Zacks Rank #5 (Strong Sell).

A Look at Other Iron Ore Miners

In November last year, Brazilian miner Vale S.A (VALE - Free Report) trimmed its guidance range for iron ore production in 2021 to 315-320 Mt. The company had produced 300.4 Mt of iron ore in 2020. VALE’s iron ore production guidance for 2022 is anticipated between 320 Mt and 335 Mt.

The Zacks Consensus Estimate for Vale’s fiscal 2022 earnings indicates a year-over-year decline of 45%. The same for revenues suggests a year-over-year slump of 26%. Vale’s shares have declined 12.8% in a year. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BHP Group (BHP - Free Report) anticipates iron ore production guidance between 249 Mt and 259 Mt for fiscal 2022, compared with 253.5 Mt produced in fiscal 2021. The mid-point of the range indicates in-line production from the prior-year levels.

The Zacks Consensus Estimate for BHP’s fiscal 2022 earnings indicates year-over-year growth of 3%. The same for revenues indicates year-over-year growth of 44%. Shares of this Zacks Ranked #3 company have fallen 5% in a year.

Fortescue Metals Group (FSUGY - Free Report) expects iron ore shipments of 180-185 Mt in fiscal 2022. The company had reported record shipments of 182.2 Mt in fiscal 2021.

The Zacks Consensus Estimate for Fortescue Metals’ fiscal 2022 earnings indicates a year-over-year decline of 61%. The same for revenues suggests a year-over-year growth of 3.6%.  It currently carries a Zacks Rank #5. The company’s shares have declined 19.9% over the past year.