Rio Tinto mines affected by Covid-19 restrictions

SYDNEY — Rio Tinto RIO 0.61%

PLC said restrictions linked to the pandemic were affecting its mining operations from Australia to Mongolia, slowing iron ore shipments, increasing production costs and delaying projects.

The disruption comes as governments around the world grapple with the impact of rising commodity prices as the global economy rebounds from Covid-19 and infrastructure spending rises. Several countries in South America and Europe have recently raised their interest rates to counter inflation fears.

Rio Tinto is the second largest mining company in the world in terms of market value, behind BHP Group Ltd.

BHP 0.38%

, and is a major supplier of raw materials to countries like China and the United States. Tighter supply risks supporting prices as trillions of dollars in global stimulus measures bolster demand for metals. Some mined raw materials, including iron ore and copper, have hit record prices this year.

“The increased stresses of Covid-19, which have resulted in numerous travel restrictions, have added additional pressure on the company,” Rio Tinto chief executive Jakob Stausholm said, detailing Rio Tinto’s operational performance at the during the three months until June.

Infections have been on the rise in many parts of the world due to highly transmissible mutations in the coronavirus, especially the Delta variant, prompting some countries to tighten public health rules in a bid to bring the number of cases under control.

Mr Stausholm said border closures have made it difficult for Rio Tinto to attract more skilled workers to its operations in countries like Australia and Mongolia, which account for the majority of its profits. These restrictions can affect maintenance work or the acceleration of new projects, the company said.

Rio Tinto now expects iron ore shipments from its Australian mining operations this year to be at the bottom of an earlier estimate of between 325 million and 340 million metric tonnes. Exports totaled 76.3 million tonnes in the three months ending June, down 12% from the previous year. The miner has also raised its forecast for iron ore production costs this year.

Some analysts believe Rio Tinto is still too optimistic about its exports. “We think something below the lower end of the range is more likely,” Jefferies said.

Covid-19 restrictions mean Rio Tinto has been slow to integrate new iron ore mines to replace old pits as resources run out. In particular, travel restrictions in Western Australia have left it short of experienced workers in mechanical, electrical and other roles, the company said.

At its development of Gudai-Darri in Australia, Rio Tinto’s first new iron ore center in more than five years, labor shortages disrupted steel fabrication and construction. “The first ore in the crusher is expected in 2021, although commissioning is later than originally planned,” the company said.

Rio Tinto said it was also grappling with above-average rainfall in northwest Australia, where its iron ore mines are located, while making adjustments to mining plans to protect areas of cultural significance. Rio Tinto has stepped up its engagement with indigenous groups after the destruction last year of two ancient rock shelters at Juukan Gorge in Australia, which contained a mine of artifacts indicating they had been occupied by humans over the past year. 46,000 years old.

The Anglo-Australian mining company said it also expects annual copper production to be at the lowest of an earlier projection. The company mined 115,500 tonnes of copper in the second quarter, bringing first half production to 236,100 tonnes. Its estimate for 2021 is 500,000 to 550,000 tonnes.

At Escondida in Chile, the largest copper mine in the world, in which Rio Tinto has a 30% stake, copper production has fallen sharply due to measures to prevent the spread of Covid-19 following an upsurge in case, Rio Tinto said.

Other infections in Mongolia have also resulted in restrictions there, which slowed construction work on the company’s Oyu Tolgoi underground copper project. Quarterly shipments from the adjacent open-pit mine were limited by restrictions on the Chinese border.

“In Mongolia, the situation has been very difficult as cases have increased in Ulaanbaatar and at the Oyu Tolgoi site,” Rio Tinto said.

The miner said he applied strict quarantine and testing measures so that workers could access his operations there. “The progress of the project has been significantly affected by the increased constraints of Covid-19,” he said.

Still, Rio Tinto was optimistic about the global economy, as supportive government policies and vaccine rollout lead to a recovery.

Write to Rhiannon Hoyle at

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