Rio Tinto iron ore exports rebound as diesel costs jump

Rio Tinto (ASX:RIO) has delivered a strong rebound in iron ore exports from Western Australia, although soaring diesel prices are expected to add around $180 million to its operating costs. The mining giant shipped 85.3 million tonnes from its Pilbara operations during the June quarter, up 7% from the same period last year and ahead of market expectations.

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Shipments also increased 18% from the March quarter, Rio told shareholders today, when cyclone activity disrupted operations and delayed the movement of millions of tonnes through Rio’s rail and port network.

The result marked Rio’s strongest June-quarter shipment performance since CY20 and lifted first-half Pilbara sales to 157.7M tonnes, 5% higher.

The Australian blue-chip heavyweight said that improved productivity and the recovery of tonnes lost during the first quarter supported the stronger result. However, Rio will still need a solid second half to reach its full-year shipment guidance of between 323 million and 338 million tonnes.

Higher fuel costs remain a key pressure point. The surge in global oil prices following conflict in the Middle East has lifted Rio’s diesel costs, adding about US80 cents to the cost of producing each tonne of Pilbara iron ore. That equates to an estimated $180M hit based on current production levels.

Despite the increase, Rio maintained its Pilbara unit cost guidance of between US$23.50 and US$25 per tonne.

Elsewhere, Rio’s quarterly copper production fell 7% to 213,000 tonnes following lower output at Escondida and Kennecott, including an unplanned furnace outage at the Utah operation.

The company lowered its expected copper unit costs for 2026, helped by stronger gold prices and productivity improvements. Gold produced alongside copper is treated as a credit against operating costs.

Investors responded positively to the update, with Rio shares gaining as the stronger-than-expected iron ore shipments outweighed concerns over rising fuel expenses.

The market will now be watching whether Rio can maintain its export momentum and contain costs through the second half of the year.

RIO is up +1.32% today.

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