Rio Tinto warns of risks from China as Q4 iron ore shipments rise

Mining giant Rio Tinto said China's dismantling of Covid-19 restrictions raised risks of labour and supply-chain shortages as it reported a 4% increase in iron ore shipments in the fourth quarter.

The coming months would bring “high volatility”, Rio said as China faced a surge in coronavirus cases, which would increase short-term risks of supply chain disruptions and labour shortages across the country.

“Steel demand recovery hinges on the country’s ability to control the COVID outbreak,” Rio Tinto said, adding that consumers remain cautious of China's property market, which had been supportive to the economy, and that slowing global demand poses some risk to its exports.

Fourth quarter shipments iron ore shipments came in at of 87.3 million tonnes (Mt). The company maintained its full-year iron ore shipments forecast of 320 Mt to 335 Mt.

Inflation, led by diesel and labour costs, was likely to have pushed the company's Pilbara iron ore unit cash slightly above the top end of its $19.5-$21.0 per tonne guidance range, Rio said.

Reporting by Frank Prenesti for Sharecast.com