Why has the Rio Tinto share price stumbled today?

Posted: 18 January 2022 12:43 pm
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Shares in mining giant Rio Tinto are down 10% in the last 6 months, continuing this slide today.

Shares in mining giant Rio Tinto (ASX: RIO) are among the most traded stocks on the ASX on Tuesday after dropping nearly 2% in early trading.

The stock, the only one of the big miners deep in the red, has regained some ground but was still down 1.1% at $109 at the time of writing.

Why is the RIO stock price weaker?

The Anglo Australian miner on Tuesday announced its fourth quarter and full year production result and the update wasn’t very encouraging, largely missing analyst expectations.

Rio Tinto reported it shipped 321.6 million tonnes of iron ore in 2021, barely above the bottom end of its already downgraded 320 to 325 million tonne guidance range.

The output for the key steel making ingredient was down 3% from 2020 levels and was its weakest in more than 5 years.

The giant miner also failed to lift output in any of its other key commodities. Copper production was down 7% for the year, bauxite fell 3%, aluminium slipped 1% and titanium dioxide tumbled 9%.

Rio Tinto Chief Executive Jakob Stausholm said that “operating conditions remained challenging”, and attributed the lower ore production 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.”

Cloudy outlook

Things are not expected to improve significantly in the new year. Rio Tinto is forecasting iron ore exports of between 320 million and 335 million tonnes in 2022, a softer-than-expected increase of up to 4%, if the pandemic restrictions do not worsen.

The company said problems with finding workers are ongoing, pushing back exports from its main plant at the new Gudai-Darri mine in the Pilbara until the June quarter due to “labour access and supply chain quality issues” as Western Australia maintains a hard border to prevent the spreading of COVID infections.

Meanwhile, the company also outlined a US$175 million blowout at its Oyu Tolgoi copper mine expansion in Mongolia, with a January 2023 deadline for first production from the project now in doubt.

It has also pushed back the likely first production from its troubled Jadar lithium project in Serbia by at least a year. Production at the project, which has faced protests, would now occur “no earlier than 2027”, it said.

Rio Tinto’s troubles have had little impact on the wider sector. Shares in key rivals BHP (ASX: BHP) and Fortescue Metals Group (ASX: FMG) were both trading more than 1% each.

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