Rio Tinto downgrades production after labour shortages in Australia

Rio Tinto said iron production from the Pilbara region of Australia will be lower than previously expected (Newscast/PA) (PA Media)
Rio Tinto said iron production from the Pilbara region of Australia will be lower than previously expected (Newscast/PA) (PA Media)

Mining giant Rio Tinto is being hit by labour shortages in Australia and has been forced to downgrade its production expectations.

The company said that it expects to ship between 320 million and 325 million tonnes of iron ore from its Pilbara operations.

Rio Tinto has 16 iron mines and employs 13,600 people in the area, in Western Australia north of Perth.

These sites were previously expected to ship “at the low end” of 325 million to 340 million tonnes.

The company said that it had been delayed finishing a new mine and doing up an old one because of a lack of staff in the region because Australian state borders are closed.

It has been another difficult quarter operationally and despite improving versus the prior quarter, we recognise the opportunity to raise our performance

Jakob Stausholm, chief executive

“The tight labour market in Western Australia continues to limit our access to labour and we have also experienced delays due to a tight global supply chain,” it said.

Costs at Pilbara are also rising due to freight, diesel and labour rates, as well as the added costs of ensuring staff get vaccinated.

Production in Canada was also hit due to problems getting hold of enough staff and equipment, while labour shortages are also hitting Mongolia

“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.

He added: “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.”

Labour and supply chain shortages have impacted many businesses around the world in recent months, as the economy sprung back into action following Covid.

In the UK, shortages of lorry drivers and a rise in gas prices due to booming international demand have been some of the most obvious impacts.

Shares in Rio Tinto had dipped by 1.9% early on Friday morning, making it the second worst performer on London’s FTSE 100.

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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