Rio Tinto’s Iron Shipments Hold Stable Despite Chinese Slump

The iron ore exports of the second-largest miner in the world have remained steady, despite the “uneven” recovery of the Chinese economy. China’s property sector remains in a slump.

Rio Tinto, the world’s largest producer of industrial metals used in steelmaking said that the demand for the metal would be driven more by the manufacturing sector, such as electric vehicles, than by the property industry.

The third quarter saw a 1 percent increase in shipments to 84.5 millions tonnes, which was matched by an equal rise in the production of iron ore at Australia’s Pilbara Mine. The Pilbara mine’s iron ore shipment expectations for the year are 323 to 338 millions tonnes.

The FTSE100 mining group reported that iron ore price rose by 1 percent in the third quarter of the year, and was trading at $99 per dry metric tonne on average. This was due to Beijing’s efforts to stimulate the Chinese economy. Stocks in Chinese ports remained flat and steel exports were lower than they were a year ago, but still higher than the previous quarter.

Rio’s Pilbara mine will have unit costs that are higher than expected this year due to cost inflation.

The company reported that the ramp-up for the Simandou Iron Ore Project in Guinea remains on track. Production is expected to begin next year.

Rio announced that it will review its product strategy for iron ore after producing a higher level of lower grade ore in order to ensure it produces enough Pilbara Blend, a higher quality ore, to meet the market’s demand. The Pilbara’s lower-grade SP10 ore represented 19% of total iron ore exports in the third quarter. This will continue to be higher than normal until replacement projects are brought on stream.

The copper output fell by 1 percent to 168,000 tonnes, but the guidance for this year was still between 660,000 and 700,000 tonnes. Production was hampered by geological movements in the Kennecott mine in America, and maintenance in the Oyu Tolgoi Mine in Mongolia.

Before the end of this year, a final investment decision on the Rincon Lithium project in Argentina will be made.

The board of the target company recommended that the company purchase Arcadium Lithium for $6.7 billion.

Jakob Stausholm described the deal as “countercyclical” by Rio’s chief executive. The deal is designed to take advantage of the low lithium prices that have been pushed down by an oversupply of Chinese lithium and concerns about the pace and extent demand for electric cars. Lithium is an important component in electric vehicle batteries.

Rio has access to lithium deposits, processing facilities, and mines in Argentina, Australia and Canada, as well as a large customer base, including Tesla, BMW, and General Motors.

A number of miners are looking to make deals in order to secure metals that will be needed to transition to low carbon energy sources. BHP failed in its bid to acquire Anglo American for £39 billion in May in order to access copper, which is used in windmills and electrical systems.

In London, the shares traded 34p or 0.7 percent higher at £50.75.

Antofgasta, a world-leading copper producer, said this year’s output would be at the lower end of its guidance due to the depletion of stocks at its Los Pelambres Chile mine. The third-quarter copper output was 179,000 tons, 15% higher than the previous quarter. The production for next year will be between 660,000 to 700,000 tons, which is lower than what analysts predicted and less than the 670,000-710,000 tonnes that were aimed at this year.