Rio Tinto Limited Navigates Challenging FY21, Invests In Greener Future
- Pilbara iron ore production down 4 per cent at 319.7 metric tonnes compared to FY20
- Announced acquisition of Rincon Mining lithium project
- Mitigated a variety of global challenges while keeping lower production within single digits across portfolio
Australian mining giant Rio Tinto Limited (ASX:RIO) delivered its fourth quarter performance report for FY21 today, presenting mixed results to its overall production portfolio, compared to 4Q20. The report presented commentary by the company’s management, attributing this mixed performance to challenges faced by its global operations throughout 2021.
Despite under-performing in comparison to the prior corresponding quarter of FY20, Rio Tinto delivered an overall improved production yield through its portfolio in comparison to the third quarter of FY21. Of significance is the underperformance of its aluminium and bauxite production, which saw up to 6 per cent less volume produced compared to the previous three months. However, Rio Tinto notes progress in the development of its project sites, and positive results from the implementation of its safe production systems, as part of upgrades to its operational performance.
With its latest report comes a full preliminary understanding of the Australian miner’s production for the year. When compared to FY20, the unaudited production report for FY21 presents 4 per cent lower Pilbara iron ore production at 319.7 metric tonnes. This slight decrease in production volume can be attributed to progress the company has otherwise made on its Pilbara replacement mines. Commenting further on the scope of challenges the company faced throughout the year, Rio Tinto Chief Executive Jakob Stausholm said, “...we continued to experience strong demand for our products while operating conditions remained challenging, including due to prolonged COVID-19 disruptions.”
Echoing this broad sentiment by the Chief Executive, the company reports shipping 3 per cent less iron ore at 321.6 metric tonnes in FY21, compared to the previous year. Providing clarity on its iron ore production, Rio Tinto describes the lower yield for FY21 being the result of above average rainfall during the first half of the year. Additionally, the company notes how cultural heritage management issues and delays to other growth and brownfield mine replacements produced similar effects on overall iron ore production within the Pilbara region.
Speaking on the company’s efforts to align itself to shifting industrial attitudes in preference of decarbonisation, the Rio Tinto Chief Executive mentioned, “In the fourth quarter we set a new direction for the company and announced a number of partnerships focused on decarbonising the value of our products, including green steel.” Supporting this ongoing effort, Rio Tinto has also entered acquisition agreements for the Rincon lithium project in Argentina.
Minimised Effects to Output Despite Global Production Challenges
Rio Tinto’s challenges within the Pilbara region were just one example of the difficulties managed by the company this past year. Apart from difficulties posed by climate considerations, labour union issues and other COVID-19 related difficulties presented to a number of its other sites within the Americas. As a result, Rio Tinto’s production yield for Aluminium is 1 per cent lower, with mined copper amounts presenting 7 per cent less production compared to FY20.
Considering that its full year production volumes place within single-digit decreases, Rio Tinto’s performance for FY21 presents as a successful effort to mitigate challenging production and supply chain factors. Additionally, the company’s focus on process development and operational upgrades sees it better-positioned to claim higher net production in FY22, especially with expectations of a return to more usual global market conditions from the global pandemic.