Commodities | Apr 22 2026
This story features RIO TINTO LIMITED.
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The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
Rio Tinto’s March quarter copper production beat forecasts, offset by a cyclonic period for iron ore.
- Rio Tinto’s March quarter production a net beat thanks to copper
- Weather was an offset in the Pilbara and elsewhere across the portfolio
- Costs increasing due to diesel prices
- Aluminium benefitting from Middle East disruption
By Greg Peel
Rio Tinto’s ((RIO)) March quarter production performance proved ahead of expectations with copper production rising 9% year on year compared to consensus expecting 5%.
This result was nonetheless offset by seasonal weakness in Pilbara iron ore shipments due to the impact of two cyclones in the period, as flagged by management last month.
Production in aluminium and lithium was broadly in line, while gold/silver production (by-product of copper mining) reported a significant year on year increase, which Citi believes should help on unit costs.
Management has maintained production and unit cost guidance across commodities and provided an update on the impact of Middle East conflict on its operations, especially on oil price sensitivity to its costs (particularly iron ore) and broadly.
Citi believes incremental costs can be absorbed with operational efficiencies.
This broker sees cost resilience in iron ore, by-product tailwinds in copper and US-Midwest premium tailwind in aluminium as positives from the quarter.
Pilbara Iron Ore
Rio Tinto’s Pilbara operations performed well, UBS suggests, posting the second highest March quarter production since 2018 despite the cyclones during the quarter which impacted shipments by around -8Mt, albeit some 4Mt of that is expected to be recovered in the June quarter.
Rio re-iterated 2026 Pilbara sales guidance of 323-338Mt with unit costs at US$23.5-25.0/t “subject to impact of higher diesel and FX”, with management noting every US$10/bbl movement in the oil price impacts costs by US$0.15/t.
Cost pressure is coming from oil and diesel spreads, with a US$70/bbl move versus 2025 feeding through. Importantly, RBC Capital notes, cost escalation only meaningfully hits from May onward due to inventory lag, meaning the second half carries the risk of around a US$1/t increase.
Analysts have ticked up their cost expectations toward the top end or above the US$23.5-US$25.0 guidance range.
The new Pilbara projects (Brockman, HD2, W Angelas) remain on track for first production in 2027 with Rhodes Ridge feasibility to be complete in 2029.
There was no disclosure on realised prices.
Simandou Iron Ore
Rio Tinto’s SimFer project at Simandou in Guinea boasts the world’s largest reserves of iron ore, and thus has the capacity to be a significant swing factor for global iron ore prices.
Simandou production declined quarter on quarter to 0.6Mt, missing consensus, reflecting fatality related disruptions, reliance on temporary crushing and an unsynchronised rail-port system.
With the operation heading into the wet season, RBC notes this biases volumes to the low-end of guidance (5-10Mt). While stockpiles (2.1Mt) support shipments, full-year delivery remains dependent on second half ramp-up and execution and the commission of permanent infrastructure.
Macquarie notes a delayed ramp-up at Simandou should be supportive for iron ore prices (delayed increase in supply).
The project is otherwise still on track with the mine 74% complete, up from 62% in the December quarter, and the port 78% complete, up from 66%.
First ore is still expected through permanent crushing facilities in the second half and the port is ahead of schedule with commissioning expected in the March quarter 2027.
The ramp-up to full capacity is still expected to be 30 months from the end of this March quarter, implying the second half 2028.
Older assets continue to drag on the portfolio, Macquarie notes, with Iron Ore Canada missing due to asset reliability issues and bad weather.
Copper
Rio’s copper result proved better-than-forecast, and Macquarie found the nature of the strong copper result at Oyu Tolgoi (Mongolia) was impressive, given the implied stronger recoveries (89%) with mill feed and grade slightly down.
This bodes well for when underground volumes eventually increase and overall grade improves, Macquarie suggests.
Oyu Tolgoi continues to ramp up as planned with the mine expected to reach 500ktpa of copper from 2028-36 compared to 345kt in 2025.
Group copper production of 229kt was 6% above consensus, driven by higher throughput at Kennecott (Utah) and Escondida (Chile).
Disruptions (power outage and smelter issues) at Kennecott were flagged prior, and some impact deferred into the June quarter, while mine performance remains capped until the next cutback in the second half of 2027.
Kennecott is one of the older assets Macquarie cites as a drag on the portfolio, along with Canadian iron ore.
Even though Kennecott cathode production was a ‘beat’, Macquarie would question these assets’ place in a simplified portfolio if management effort to improve performance outweighs benefits.
Aluminium/Lithium
The Middle East is a major global supplier of primary aluminium outside China, producing around 9% of global primary aluminium, which is shipped through the Strait of Hormuz, normally.
Macquarie notes the aluminium premiums Rio is experiencing at both London and US Mid-West exchanges are more than compensating for increased US tariff costs, with the company benefiting from the Middle East disruption, which Macquarie expects to persist across a 12-24 month timeframe.
Rio’s aluminium production was in line with consensus estimates despite a scheduled ramp-down of its Arvida smelter in Quebec.
Bauxite production missed estimates due to the cyclones in northern Australia that hampered its operations at Weipa and Gove.
Heavy rainfall at its Olaroz and Fenix projects in Argentina meant lithium output also fell short of consensus estimates.
Other Middle East Disruptions
Management noted there had been minimal direct impacts on its supply lines for other inputs, such as jet fuel and caustic soda, and no disruption to production, although costs for those inputs had surged.
For another key input, sulphuric acid, the company highlighted it was net long producer of the ingredient globally given its Kennecott copper smelter converts sulphur dioxide from the smelting process into high-quality acid.
The Response
In the wake of the various ups and downs among commodities, analysts found the March quarter largely in-line on an operational basis, with copper leading to a slight beat.
Notably, FY26 production guidance remains unchanged across all key divisions.
There is no change to ratings from the six brokers monitored daily by FNArena covering Rio Tinto, with Macquarie on Outperform, Ord Minnett on Accumulate, and all of Citi, UBS, Morgan Stanley and Morgans on Hold or equivalent.
Morgans previewed Rio’s March quarter report last week but is yet to update post the actual release.
The consensus target is little changed at $167.33, although brokers have spent April updating their forecasts. The April Fool’s Day consensus target was $155.50.
RBC Capital rates Rio Tinto Sector Perform and has cut its target to $141 from $143.
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