Rio Tinto downgrades iron ore guidance again

The miner lowered its annual production guidance to between 320 million tonnes and 330m tonnes from between 333m and 343m as it highlighted operational challenges in the Greater Brockman hub in the Pilbara region of Australia. Rio said this was resulting in a higher proportion of certain lower grade products, partly to protect the quality of its flagship Pilbara Blend.

Given the change in volume guidance, unit costs will be updated in the second quarter operations review in July, it said.

RBC Capital Markets analyst Tyler Broda said: "This will cause two negatives to consensus expectations for the division - 1) lower realised prices and 2) higher unit cost expectations (which will be disclosed at the Q2 update on 16 July).

"We had already expected costs to increase half on half from the implications of lower fixed cost dilution and cost impacts from the cyclones to $14.30/t but it is not clear how much of this impact is expected to be felt in Q2 versus the balance of the year."

Rio had already downgraded its Pilbara production guidance back in April, from between 338m and 350m tonnes. This was due to a slower ramp-up and ongoing disruption to shipments caused by weather and other factors.

At 1420 BST, the shares were down 3.6% to 4,701.51p.