Uncertainty about how China’s reopening will play out has clouded the short-term outlook for Rio Tinto’s core market, the Anglo-Australian miner said today.
Rio Tinto reported a strong finish to 2022 today, with a five per cent hike in shipments on the previous quarter, offloading 87.3 megatonnes (Mt) over the three month window. It also saw a six per cent bump up in production, which has risen to 89.5 Mt.
The miner benefited from a continued ramp-up at Rio’s Gudai-Darri mine in Western Australia, which is expected to reach its nameplate capacity during 2023.
This brought its full-year shipments to 321.6 Mt, beating a Visible Alpha consensus estimate of 320.2 Mt, Reuters reported. With this, the miner maintains its lofty position as the world’s biggest iron ore producer.
Nevertheless, it argued short-term uncertainty in China – its key market – is expected to remain, with the firm wary that a downturn could hamper sales of electrical vehicles, and slow construction projects denting demand for steel.
For instance, it believed consumers are wary of China’s property market – a key pillar of its the economy – and that slowing global demand poses some risk to its exports.
China’s property sector was severely hampered last year, after debt-ridden developers failed to finish numerous projects. But a raft of government measures combined with the abrupt removal of its zero-Covid policy has boosted the market.
The update comes after Rio Tinto last month completed the acquisition of Turquoise Hill for approximately $3.1 bn.
The deal gives Rio Tinto greater control over the Oyu Tolgoi mine in Mongolia copper mine, increasing its stake to 66 per cent.
Rio Tinto chief executive Jakob Stausholm, said: “The acquisition of Turquoise Hill Resources strengthens our copper portfolio and demonstrates our ability to allocate capital with discipline to grow in materials the world needs for the energy transition and delivering long-term value for our shareholders.”
Rio Tinto is also preparing to create a foundation to support cultural projects in Western Australia, as it seeks to heal its reputation following the fallout of the Juukan Gorge controversy.