Rio’s profit margins are rapidly contracting, with production costs rising as another big commodity price slump pushes iron ore to the brink of double figures.
Rio Tinto’s flagship iron ore division is suffering a surge in absenteeism and rising unit costs as another big commodity price slump threatened to push the iron ore price below $US100 per tonne on Friday.
The rising costs was implied when Rio retained its promise to keep unit costs between $US19.50 and $US21 per tonne, but changed its assumption for the value of the Australian dollar this year from an average of US75¢ to US71¢. Very weak sentiment in Asian steel markets suggests further falls in the iron ore price to below $US100 per tonne are possible in the near future.“We are currently experiencing elevated levels of unplanned absences at our Pilbara operations due to COVID-19 case spikes,” said the miner in a statement.The comment comes as Rio races to finish work on new mines being built in the Robe Valley.
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