Rio Tinto warns on H2 underlying earnings amid labour shortages

Mining giant Rio Tinto warned on Friday warned that both Covid 19-related labour shortages across Western Australia and rising inflation were set to weigh on its second-half underlying earnings performance.

Rio Tinto posted a miss across the board with its second-quarter output update, with Pilbara iron ore shipments up 4.7% year-on-year at 79.9 megatonnes, narrowly missing estimates of 80 megatonnes.

Heightened levels of Covid-19 cases at Rio's Pilbara operations also led to "elevated levels of unplanned absences", driving a 2% drop in shipments in the first half, while adverse weather conditions also impacted operations.

However, the FTSE 100-listed group maintained full-year iron ore shipment guidance at 320-335 megatonnes, with the company expecting its newly opened Gudai-Darri mine in Western Australia's Pilbara region to continue to raise production and reach full capacity by 2023.

"As Gudai-Darri continues to ramp-up, we expect increased production volumes and improved product mix in the second half," Rio said in a statement.

Rio also highlighted that higher rates of inflation impacted underlying earnings, resulting in increased pre-tax costs of about $400.0m in the first half.

As of 0930 BST, Rio Tinto shares were down 2.03% at 4,474.45p.

Reporting by Iain Gilbert at Sharecast.com