Rio reveals details of cyclone damage

Rio Tinto has revealed the extent of the damage inflicted by Cyclone Veronica at its Port Lambert A terminal and updated the market on how it will impact its full-year Pilbara iron ore guidance.

The miner said today the damage, together with a fire at a screening plant at the port in January, would cost it about 14 million tonnes in lost shipping output this year.

A Rio spokesman told WestBusiness swell from the cyclone had caused non-structural damage to the wharf while flooding at other assets had caused some electrical problems.

The storm had also delayed the return of the screening plant that was damaged by a fire in January.

Rio was forced to declare force majeure to some of its customers last week after the cyclone damaged Cape Lambert A, crippling its shipping operations from the port.

The fire also prompted Rio to declare force majeure earlier this year.

“As a result Rio Tinto’s Pilbara shipments in 2019 are expected to be at the lower end of the 338 and 350 million tonnes (100 per cent basis) guidance provided,” the company said this morning.

It is not yet known when the company will return to full capacity at Cape Lambert A.

Cape Lambert A, which houses four berths, has capacity to ship 85 million tonnes a year, but about 6Mtpa has moved through the terminal in recent times.

In 2018, Rio Tinto shipped 57.4Mt of Hamersley Iron Yandigoogina ore and 32Mt of Robe River product through the facility.

The Cape Lambert A finger jetty protrudes out further to sea than the newer Cape Lambert B terminal, making it more exposed to damage from big seas and wind.

Shipping data suggests Cyclone Veronica cost the big miners more than 15Mt in lost exports or about $2 billion in revenue, representing one of the biggest storm-related outages in the Pilbara iron ore industry’s history.

But that figure could creep higher if Port Lambert A is out of action or operating at reduced capacity for a sustained length of time.

It is estimated the Cape Lambert Terminal A outage could cost Rio about $150 million in lost revenue for every week it is closed.

Last week, Macquarie cut its March-quarter shipment forecasts for Rio, BHP and Fortescue Metals Group by a combined 11Mt because of the cyclone.

However, all the miners will seek to make up for lost tonnes over the coming weeks and months.

The latest outage comes at a time of tightness in the global seaborne iron ore market with at least 43Mt of product knocked out by mine closures in Brazil after a deadly tailings dam failure in January.

Investors brushed off the production update from Rio today, instead focusing on a higher iron ore price.

MySteel reported the benchmark 62 per cent CFR fines price was up 2.5 per cent to $US86.90/t on Friday.

Rio shares were up $1.62, or 2 per cent, at the close at $99.53 after hitting a fresh 10-year high of $99.89 in earlier trade.