Rio Says Storm Damage at Port to Impact Iron Ore Shipments

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(Bloomberg) -- Rio Tinto Group, the world’s biggest iron ore exporter, warned shipments of the steelmaking material will be impacted this quarter after a tropical cyclone in Australia’s northwest damaged a port facility.

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A railcar dumper at Dampier Port — used to empty iron ore cars transported by rail from mine to port for export — was flooded after the storm passed the coast this week, Rio said in a statement Friday. Initial indications suggested the dumper at East Intercourse Island could be offline for three to four weeks.

The repairs could see between 3 million and 4 million tons of shipments impacted in the first quarter, although Rio could like make up any shortfalls in the second half, RBC Capital Markets analyst Kaan Peker said in a note.

Should repairs take longer than four weeks, Rio’s full-year guidance of between 323 million and 338 million tons — which it kept unchanged on Friday — would likely be lowered, Peker said. “We would argue that a risk premium may start to be factored into iron ore” as the company’s inventory levels were already low, he added.

Australia typically experiences between three and five cyclones across the northwest region annually.

(Updates with RBC analysis in third, fourth paragraphs.)

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