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Rio Tinto share price: iron ore shipments hit 327.4mt in 2019

We examine Rio Tinto’s latest Q4 production results, with a primary focus on the results of the company’s iron ore operations.

Rio Tinto share price rises on Q4 release

Rio Tinto (ASX: RIO) – the $38bn Metals & Mining company – today released its fourth quarter production results to the market. In response, its stock bounced at the open, with the Rio Tinto share price trading up to the $104.610 mark.

While today’s production release doesn’t provide investors with the full picture of RIO’s FY19 financials, it does give us insight into the company’s all-important shipment and production statistics.

Overall, Rio Tinto saw its iron ore shipments rise during the fourth quarter, hitting 86.8 million tonnes in Q4 – representing an increase of 1% on Q3. In saying that, and though shipments rose, production fell during the fourth quarter: hitting 83.6 million tonnes in Q4.

Looking at the broader picture, FY19’s front-line production and shipment figures came in a shade lower: here, Pilbara iron ore shipments and production (on 100% basis) came in at 327.4 million tonnes and 326.7 million tonnes, respectively – both down ~3% vs 2018.

As has been a theme of the company's market commentary over the last year, Rio attributed these modest declines to challenging weather conditions and operational difficulties experienced in H1 FY19. The company also noted that this was compounded by the ‘active decision to protect the quality of the Pilbara Blend.’

Speaking to the company's latest market release, CEO J-S Jacques commented:

'We finished the year with good momentum, particularly in our Pilbara iron ore operations and in bauxite, despite having experienced some operational challenges in 2019.'

Mr Jacques also said:

'We are increasing our investment, with $2.25 billion of high-return projects in iron ore and copper approved in the fourth quarter.'

The 2020 outlook

Though Rio Tinto faced challenges in 2019, the company provided optimistic commentary around 2020. Here it was noted that:

'Our increased focus on waste material movement and pit development will continue in 2020 to improve mine performance and pit sequencing.'

All up, the miner expects 2020 iron ore shipments in the range of 330 million tonnes to 343 million tonnes – on a 100% basis.

As is typically the case, Rio Tinto noted that estimates surrounding iron ore were subject to weather and market conditions.

Iron ore prices: the story so far

Looking at the impact of buoyant iron ore prices over the last year and on a wet metric tonne (WMT) basis, Rio achieved an average iron ore price of $79.0 during 2019. This represents a ~36% increase on the year prior, with Rio seeing average iron ore prices of $57.8 per WMT in 2018.

At the time of writing, the 62% iron ore Fe Fines spot price traded at the US$94.55 per tonne mark.

After today's Q4 release, the Rio Tinto (ASX: RIO) share price is now up ~30% over the last year.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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