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•      Health, safety and well-being remains our top priority. Our all injury frequency rate (AIFR) of 0.35 improved versus the first quarter of 2020 (0.40). However, we recognise there is no room for complacency and continue to focus on providing strong support for our employees, contractors and host communities, while maintaining critical COVID-19 controls.

•      Pilbara iron ore shipments of 77.8 million tonnes (100% basis) were 7% higher than the first quarter of 2020. Production of 76.4 million tonnes (100% basis) was 2% lower, driven by above average wet weather in the mines through February and fixed plant reliability. Labour resource availability and weather challenges disrupted maintenance. Tropical Cyclone Seroja impacted mine and port operations in April. Full year iron ore guidance remains unchanged.

•      Production of pellets and concentrate at Iron Ore Company of Canada (IOC) was 8% lower than 2020 due to the impacts of weather, loading unit availability on mine feed and reduced concentrator mill availability. There was a fire at one of the two reclaimers at the port on 31 March. Full year production guidance remains unchanged.

Production

Production guidance

Operating costs

Pilbara iron ore 2021 unit cost guidance of $16.7-$17.7 per tonne remains unchanged. Operating cost guidance is based on A$:US$ exchange rate of 0.77.

Pilbara operations

Pilbara operations produced 76.4 million tonnes (Rio Tinto share 63.3 million tonnes) in the first quarter, 2% lower than 2020 due to fixed plant reliability and above average wet weather in the mines. In the first quarter, labour resource availability and weather challenges disrupted maintenance in the mine processing facilities which will be prioritised for the rest of the year.

Full year iron ore shipments guidance remains unchanged. It remains subject to risks associated with tying in approximately 90 million tonnes of replacement mine capacity at existing hubs in Robe Valley, West Angelas and Western Turner Syncline Phase 2 as well as the start-up of Gudai-Darri.

First quarter shipments of 77.8 million tonnes (Rio Tinto share 64.6 million tonnes) were 7% higher than 2020, due to solid operating performance and sufficient inventory available in the quarter. We shipped 5.6 million tonnes of SP10 during the first quarter.

Approximately 13% of sales in the first quarter were priced by reference to the prior quarter’s average index lagged by one month. The remainder was sold either on current quarter average, current month average or on the spot market. Approximately 29% of sales in the first quarter were made on a free on board (FOB) basis, with the remainder sold including freight.

On 19 February, we announced a new commercial freight shipping service connecting Western Australia’s Pilbara region to Singapore. We expect the service to reduce the lead-time for goods by six to ten days compared with freight via Fremantle, and potentially provide opportunities for local Pilbara businesses. Additionally, the new service is expected to provide an annual saving of around three million litres of diesel fuel by reducing road travel from Perth by more than 3.8 million kilometres.

China Portside Trading

We continue to ramp up our port sales in China, with 1.8 million tonnes of sales in the first quarter. Since the commencement of our portside business we have supplied more than 60 new steel mill customers, and we are present at 12 ports in China. Our portside operation handles product from our operations in the Pilbara and in Canada as well as third party product, and provides blending and screening capabilities.

1 SP10 includes other lower grade products.

2 Shipments includes material shipped from the Pilbara to our portside trading facility in China which may not be sold onwards by the group in the same period.

3 While Rio Tinto has a 53% net beneficial interest in Robe River Iron Associates, it recognises 65% of the assets, liabilities, sales revenues and expenses in its accounts (as 30% is held through a 60% owned subsidiary and 35% is held through a 100% owned subsidiary). The consolidated basis sales reported here include Robe River Iron Associates on a 65% basis to enable comparison with revenue reported in the financial statements.