Rio Tinto posted 152.3 million tonnes of iron ore production in Pilbara in the first half of 2021, 5% lower than the first half of 2020 due to above average rainfall, shutdowns to enable replacement mines to be tied in, processing plant availability and cultural heritage management.

Second quarter production of 75.9 million tonnes (100% basis) was 9% lower than the second quarter of 2020. Its 2021 iron ore production guidance remains at 325 to 340 million tonnes in Pilbara.

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Pilbara operations

Pilbara operations produced 152.3 million tonnes (Rio Tinto share 126.9 million tonnes) in the first half of 2021, 5% lower than the first half of 2020 due to above average rainfall, shutdowns to enable replacement mines to be tied in, processing plant availability and cultural heritage management. Ongoing COVID-19 restrictions and a tight labour market have further impacted our ability to access experienced contractors and particular skill sets.

Sustained wet weather had an estimated impact of around 3 million tonnes in the first half. Consistent and above average rainfall impacted mine operations, particularly at West Pilbara and Robe Valley operations. The recorded rainfall days were 30% and 70% above the five year average at Paraburdoo and Karratha respectively, while rainfall at Pannawonica was 60% above the five year average.

The impact from shutdowns to enable replacement mines to be tied in at Western Turner Syncline and Robe Valley, and reduced processing plant availability, particularly at Yandicoogina, is estimated to be 4 million tonnes in the first half.

Execution of shutdowns was also impacted by labour shortages due to COVID-19 restrictions and high labour demand.

We continue to prioritise engagement with Traditional Owners and cultural heritage management in daily site operations. To date, 2021 production has been reduced by around 2 million tonnes as mine plans have been amended, and buffers and exclusion zones have been incorporated to protect areas of high cultural significance. Mine plan changes have also resulted in increased production of SP-10.

Blast management plans have been developed to create smaller, higher controlled blasts to minimise vibration and protect heritage sites (approximately 11% of blasts in the first half), which has had some impact on mining productivity and materials handling. Going forward this will remain a risk factor, however we are adapting mine practices and improving productivity.

Mine production risks remain in the second half, as we complete construction and commissioning of Gudai-Darri, our first new hub in over five years, and ramp up production from replacement mines. The increased tightness in Western Australia’s labour market continues, in particular shortages of roles relating to structural, mechanical, electrical and instrumentation disciplines, which is amplified by ongoing COVID-19 travel restrictions. Despite these impacts, all projects are expected to achieve first ore in the period previously disclosed, although completion in 2021 is slightly later than planned.

First half shipments of 154.1 million tonnes (Rio Tinto share 128.6 million tonnes) were 3% lower than the first half of 2020 with some additional drawdown of inventories. Full year iron ore shipments guidance is expected to be at the low end of the range and remains subject to COVID-19 disruptions, tie-in and ramp up of replacement mines and cultural heritage management.

In June we successfully completed a planned five week maintenance shut at one of our four port terminals, East Intercourse Island (EII), slightly ahead of plan. During the shut we replaced four ‘apron feeders’ below the rail car dumper that were around 50 years old.

Approximately 12% of sales in the first half 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 half were made on a free on board (FOB) basis, with the remainder sold including freight.

Achieved average pricing in the first half of 2021 was $154.9 per wet metric tonne on an FOB basis (equivalent to $168.4 per dry metric tonne, at 8% moisture assumption). This compares to the average first half price for the monthly average Platts index for 62% iron fines converted to an FOB basis of $172.6 per dry metric tonne.

On 22 June, we announced the deployment of the world’s first fully autonomous water trucks at Gudai-Darri. The three new water trucks will join a fleet of Caterpillar heavy mobile equipment including autonomous haul trucks and production drills, and will be primarily used for dust suppression on site. The trucks will enhance productivity by enabling mine operations to digitally track water consumption and reduce waste.

China Portside Trading

We continue to significantly increase port sales in China, with 5.4 million tonnes of sales in the first half of 2021 (3.6 million tonnes in the second quarter), doubling 2020’s volumes. In the second quarter, we surpassed 10 million tonnes since the programme commenced and completed the first bonded sale to a steel mill in Indonesia ex Zhanjiang port. 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. Approximately 85% of products sold were either blended or screened in Chinese ports in the first half of 2021.

Pilbara replacement projects

At Gudai-Darri, mining has commenced with more than nine million cubic metres of pre-stripping completed in June. Labour shortages have impacted both steel fabrication and site construction activities. First ore in the crusher is expected in 2021, although commissioning is later than originally planned. The project is expected to ramp up in early 2022, consistent with previous guidance.

First ore at West Angelas (C, D) was achieved in June with load commissioning expected later in the year following delays related to heritage management. First ore at Robe Valley (Mesa B, C, H) and Western Turner Syncline Phase 2 is still expected in 2021, consistent with previous guidance.

T1: Operational Data

T2: Guidance