Rio Tinto (ASX:RIO) downgrades iron ore guidance

Mining giant Rio Tinto (ASX:RIO) has cut financial year 2022 iron ore production guidance following a “difficult” September quarter.

The iron-ore miner now expect to ship between 320 million and 325 million tonnes in FY22, versus prior guidance between 325 million and 340 million tonnes. Rio said the downgrade was related to delays in the new greenfield mine at Gudai-Darri and the Robe Valley brownfield mine replacement project as they faced a “tight labour market in WA”.

Rio noted that the labor shortage was due to Covid-19 restrictions and border closures. The company plan to continue managing Covid-19 and prioritise work across critical projects, as challenges associated with interstate and international border access continue, impacting the availability and movement of people, most notably in Australia and Mongolia. Plans to mitigate labour shortages are in place.

“The third quarter has demonstrated the resilience of our people in dealing with ongoing Covid-19 challenges. It has been another difficult quarter operationally and despite improving versus the prior quarter, we recognise the opportunity to raise our performance. We have consequently modestly adjusted our guidance,” said chief executive Jakob Stausholm.

“We are progressing against our four pillars and striving to make Rio Tinto even stronger, notably to become the best operator. This will ensure we continue to deliver attractive returns to shareholders, invest in sustaining and growing our portfolio, and make a broader contribution to society, particularly in relation to the drive to net-zero carbon emissions.”

Shares in Rio Tinto (ASX:RIO) are trading 1 per cent lower at $99.55.