Posted on 20 Apr 2016
Rio Tinto Tuesday trimmed its iron ore production outlook in Western Australia for 2017 by up to 20 million mt, due to delays in rolling out its automated train system.
The Anglo-Australian miner is now expecting to produce 330 million-340 million mt in the Pilbara in 2017, down from its previous target of 350 million mt.
Rio’s ‘AutoHaul’ driverless, heavy-haul train network was expected to be completed by mid-2016, but despite more than 75,000 km of trials is experiencing some technical delays.
Melbourne-based Rio spokesman Bruce Tobin said there was no revised timeframe for the completion of AutoHaul, though he emphasized the system’s importance in lifting production capacity in Western Australia from around 340 million mt/year currently to 350 million mt/year and beyond.
Rio has previously explained that train driver availability was one of the main operational bottlenecks in Western Australia and the company has already rolled out a fleet of 69 autonomous trucks at its mines.
“We effectively need AutoHaul to get to 350 million-360 million mt/year,” he said.
Tobin said the miner still expects China to reach crude steel production of more than 1 billion mt by the second-half of the next decade.
RBC Capital Markets said in a note on Rio’s January-March quarter output that the autohaul delay could “help to remove some additional iron ore from a market which already appears oversupplied and therefore may in fact prove convenient for Rio.”
Despite the softer outlook for next year, Rio has maintained its guidance of 350 million mt for iron ore exports from its Australian and Canadian operations this year.
The miner produced a total 84 million mt of iron ore in January-March, down 4% on the December quarter, which it attributed to seasonal wet weather in Australia, but was 12% higher than the year before.
Total iron ore shipments were slightly lower than production at 80.8 million mt in January-March, down 12% on the December quarter and 4% lower on the same quarter last year.
Rio said iron ore production at its Nammuldi mine in Western Australia would double to around 10 million mt/year by the end of 2016. The company is expected to make a decision to invest in its Silvergrass iron ore project in the second-half of this year. A key focus is maintaining the quality of its flagship Pilbara Blend product as grades start to deplete at older mines.
