Rio Tinto has kicked off 2014 by missing expectations for iron ore output, but has stuck to its full year guidance.
The world’s second largest miner and iron ore producer blamed cyclone Christine in the Pilbara for affecting March quarter production, which totalled 66.4 million tonnes of iron ore.
That was six per cent lower than in the final three months of 2013, but still a record high for a first quarter and up eight per cent on a year ago.
Rio still expects to produce 295 million tonnes of iron ore for the year, only slightly below the world’s largest iron miner, Brazil’s Vale, which produced 299.8 million tonnes last year.
Rio’s iron ore business is easily its biggest earner, but there are fears the price of the commodity could be set to fall heavily.
Reports emerged on Tuesday of the Chinese government cracking down on access to credit, amid predictions of slowing global steel demand by the World Steel Association and excess inventories in China.
Executives such as Vale’s Murilo Ferreira and Rio’s Sam Walsh have rejected warnings of a debt-driven economic crash in China, and economic growth figures due out on Wednesday will be closely watched.
Mr Walsh said the company’s quarterly result included a series of performance records, including shipments of 66.7 million tonnes of iron ore, up 16 per cent on a year ago.
Fat Prophets analyst David Lennox agreed, and said he thinks a slowdown in China would not necessarily hurt Rio or BHP Billiton.
It would rather lead to unprofitable Chinese iron ore miners shutting, to preserve local resources, he said.
Locals were already shutting down, with an extra 100 million tonnes of iron ore shipments entering China last year despite no great rise in steel production, Mr Lennox said.
Rio’s production report also showed it could diversify its earnings away from iron ore, with its copper business mining 156,500 thousand tonnes of copper, above expectations and up 17 per cent from a year ago.
But the newly completed $US6 billion-plus Oyu Tolgoi mine in Mongolia continues to be problematic, with production down due to equipment problems, as disputes with the government continue.
Cost cutting continues, with exploration spending for the quarter down 40 per cent to $US155 million, to follow a $US1 billion cut last year.
Rio shares gained nine cents to $63.65.