Rio Tinto (NYSE:RIO) -2.4% pre-market after warning Friday that labor shortages in Western Australia, continuing COVID lockdowns in China, falling commodity prices and rising inflation would cause “considerable headwinds” and weigh on its underlying earnings in this year’s second half.
“Trade disruptions, food protectionism and the global focus on securing energy supplies continue to put pressure on supply chains, which will need to be significantly eased before inflationary pressures subside,” the company said.
Rio (RIO) said higher rates of inflation have increased its closure liabilities, adding ~US$400M in pre-tax charges to underlying H1 earnings.
In its Q2 operations review, Rio (RIO) reported a 4.7% increase in Q2 iron ore shipments, as deliveries from its Gudai-Darri project in the Pilbara region offset bad weather and labor shortage.
Rio (RIO) said it shipped 79.9M metric tons of iron ore in the quarter compared with 76.3M tons a year earlier, and it left full-year iron ore shipment guidance unchanged at 320M-335M tons, but it downgraded full-year guidance for aluminum and diamond production.
Shares of iron ore miners BHP (BHP) and Fortescue (OTCQX:FSUMF) also fell in Australian trading, and some analysts predict Rio’s (RIO) results will prompt downgrades to earnings forecasts.
Iron ore futures closed Thursday at ~$106/ton, as commodities have been falling across the board.