Rio Tinto PLC (LON:RIO) has said iron ore shipments this year will be at the low end of its guidance range as deliveries fell 1% year-on-year in the past quarter.
With commodity prices continuing their downward trend during the quarter, the FTSE 100 mining giant acknowledged “slowing global demand” and said “there are further downside risks to demand as the global economy slows”.
Having already slashed its interim dividend in July, the Anglo-Australian group signalled that things are unlikely to get any easier any time soon, noting that the slowing demand poses downside risks to China's exports and property market, while also pointing to wobbles in the US consumer and a nascent Eurozone recession.
Copper has also suffered, with the LME price dropping by 7% over the third quarter, with Rio Tinto noting also that prices have been partly supported by supply concerns and low exchange inventories, which currently remain at multi-year lows.
Aluminium demand has also “deteriorated”, especially in Europe, which placed downward pressure on prices, down 20% in the quarter.
Lithium carbonate prices remain elevated on strong demand, Rio noted, as the electric vehicle market continues to enjoy strong growth, while power rationing in China's key lithium supply hub of Sichuan continues to disrupt global production.
The group lowered its capital investments guidance for the year by US$0.5bn to around US$7bn, due to a stronger US dollar and "reassessment on timing of decarbonisation investment".
Last week, Rio Tinto chief executive Jakob Stausholm noted, the group announced a partnership with the Canadian government to invest up to C$737mln over eight years to decarbonise its Fer et Titane operations in Québec.
Today he also announced in a separate statement that the Rhodes Ridge 50-50 iron ore joint venture in the East Pilbara in Western Australia will be “modernised”, using Rio’s existing infrastructure in the region, with a study to consider the development of a plant with 40mln tonne annual capacity before the end of the decade, with the project total resource of 6.7bn tonnes representing around a third of the group’s existing resource base in the Pilbara.