Rio Tinto’s 2017 Production Review: Iron Ore Output Is Expected to Remain Steady in the Upcoming Year

January 19th, 2018 by Trefis Team
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Rio Tinto (NYSE:RIO), the world’s second largest iron ore producer, released its full year production review on January 16. The company reported a stagnant year-over-year growth in iron ore shipments from its Pilbara mines in Western Australia in 2017, which is relatively modest compared to the growth seen over the previous three years.

The chart below summarizes the production figures for the major commodities produced by Rio Tinto coupled with the company’s production forecast for the upcoming year. Rio’s iron ore shipment in 2018 is expected to grow by 3% at most, in an optimistic scenario. Keeping iron ore production within the current levels reiterates Rio’s focus on “value over volume.”

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China, the world’s largest iron ore consumer is expected to experience a stagnated demand for steel in 2018 as per the latest data released by the World Steel Association (WSA). In such a context, it seems accurate for Rio to not display a significant rise in its production volume in the upcoming year. Rio will continue to realize higher prices for its premium grade iron ore as China’s fight against pollution continues.

We have created an interactive model that details Rio’s changes in production volume for its major commodities. Rio will release its  Q4 and full year financials on February 7 which will provide us a deeper insight into its operational performance for 2017.

We have a $47 price estimate for Rio Tinto, which is below the market price.

Have more questions about Rio Tinto? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Rio Tinto