Analyst Note| Jon Mills |
Strong iron ore sales drove a solid first-quarter fiscal 2023 for no-moat Rio Tinto. The company’s share of Pilbara iron ore shipments, the key driver of its earnings, was about 70 million metric tons, 16% higher than first-quarter fiscal 2022. The increase was driven by 12% higher production in the quarter along with the company drawing down inventory. First-quarter sales are broadly tracking our unchanged 2023 forecast. However, given the usual seasonality in iron ore production and also that Rio’s new 100%-owned Gudai-Darri mine is on track to ramp up to full production of about 43 million metric tons during 2023, our forecast for Pilbara iron ore sales of about 280 million metric tons (Rio’s share) in 2023 could be on the low side if current production levels are maintained. However, it is still early in 2023, so we maintain our forecast for now.