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Diversified miner Rio Tinto has upped its iron ore shipment guidance for 2020 by 5 percent, with high hopes for its Pilbara project.
Diversified miner Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) has announced its expectations for 2020, with high hopes for its iron ore asset, the Pilbara project.
In a press release on Wednesday (October 31), Rio Tinto forecasts that its shipment guidance could increase by up to 5 percent between 2019 and 2020, subject to market conditions. The company will announce those numbers officially in January 2020.
Rio Tinto expects the capital expenditure for its iron ore business to be somewhere between US$1 billion and US$1.5 billion per year from 2020, as opposed to its earlier guidance of about $1 billion.
“We are not complacent, and will step up our operational performance to fully optimize our assets and maintain strong cash delivery,” Rio Tinto CEO Jean-Sébastien Jacques said in a press release.
“We will continue to create value by strengthening relationships with our customers and with other partners, both of which are crucial for our future success.”
The Pilbara project has struggled to produce iron ore in 2019 due to cyclones and other poor weather incidents, which have negatively affected production output. In April, Rio Tinto adjusted its yearly shipment guidance because of these weather conditions, dropping it from between 338 million and 350 million tonnes to a range of 333 million to 343 million tonnes.
In addition to iron ore, Rio Tinto offered an update on its Oyu Tolgoi mine, which it claims will be one of the top copper and gold mines in the world. The miner announced that construction of Shaft 2 is complete, and it expects to release a definitive estimate for the project in the second half of 2020.
Iron ore had a hot summer, but prices have since fallen slightly and stabilized as supply increases. Iron ore saw a decrease in supply due to unexpected disasters like Pilbara’s weather conditions and Vale’s (NYSE:VALE) dam collapse in January.
FocusEconomics‘ analyst panel expects iron ore to gradually decline from the peaks it hit during the summer, but maintains that prices will remain higher than they were in 2018.
On Thursday (October 31), Rio Tinto opened at AU$52.20, declining 2.65 percent from the previous day.
Iron ore opened the markets at US$89.80 per tonne, a 0.34 percent decrease over the past week.
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Securities Disclosure: I, Sasha Dhesi, hold no direct investment interest in any company mentioned in this article.