MARKET REPORT: Rio Tinto haunted by Aboriginal cave blasts scandal

MARKET REPORT: Rio’s iron ore output slumps as miner struggles with rain, labour shortages and fallout from the Aboriginal caves scandal

Heavy rainfall, labour shortages and taking greater steps to protect cultural heritage sites have all hit Rio Tinto’s iron ore output.

The amount of the key metal – used to make steel – that the FTSE 100 group shipped fell by 12 per cent in the three months to June compared with last year. This translated to around 76m tonnes.

Terrible weather brought operations to a halt at times and it has struggled to get skilled staff because of Covid.

Triple whammy: The amount of iron ore that Rio Tinto group shipped fell by 12 per cent in the three months to June compared with last year. This translated to around 76m tonnes

But the loss of around 2m tonnes of shipments came as Rio worked to repair its reputation in the wake of the Juukan Gorge tragedy last May, when it blew up two sacred Aboriginal caves to expand an iron ore mine.

It said this year it has changed mine plans and added a number of buffers and exclusion zones in the areas it works ‘to protect areas of high cultural significance’.

Boss Jakob Stausholm said that since the destruction at the Juukan Gorge Rio had ‘reflected on the magnitude of what was lost by our actions, and that the hurt we have caused will never be forgotten’. 

Stock Watch – Luceco 

Lighting maker Luceco smashed sales expectations as the boom in house renovations that started during the first Covid lockdown continued apace.

Luceco specialises in LED (light-emitting diode) lighting. LEDs are designed to last much longer and are more efficient than other types of bulbs – making them popular for those want to go green.

First-half revenues came in at £108million, up from estimates of £105million. 

Profits were £19million on forecasts of £18million.

Shares in the group, which expects annual earnings to be ahead of predictions too, rose 3.2 per cent, or 12p, to 393p.

After the difficult quarter – during which copper production also slid – Rio said it now thinks its iron ore output will be at the lower end of a guided range of 325million to 340m tonnes for the year.

Fortunately for Rio, spiralling iron ore prices are likely to mean lower production is not felt too keenly. The metal, which is imported in huge amounts by China, is worth $220 a tonne at present – doubling in value since December.

The prices of other major metals such as copper have also jumped since Covid struck and are gaining ground now that the global economy is starting to recover and raw materials are in high demand.

But Rio (down 3.4 per cent, or 211p, to 5931p) shares fell yesterday alongside the Footsie’s other heavyweight mining firms as the prices of several commodities fell in the day’s trading session.

The falls in Rio, Glencore (down 3.5 per cent, or 11.05p, to 309p), Anglo American (down 2.8 per cent, or 84p, to 2889p), Evraz (down 2.5 per cent, or 15.2p, to 593.4p) and others dragged on the blue-chip index.

The FTSE 100 closed down 0.06pc, or 3.93 points, to 7008.09 after it failed to cling onto early gains. The FTSE 250 fell 0.2pc, or 34.25 points, to 22467.

Although it did not catch on across the wider market, several companies’ stock saw a Freedom Day rally as traders awaited the loosening of Covid restrictions in England on Monday.

Shares in Premier Inn-owner Whitbread (up 1.7 per cent, or 50p, to 2924p), Wetherspoons (up 1.1 per cent, or 12p, to 1074p) and Mitchells & Butler (up 1.3 per cent, or 3.4p, to 262p) all rose, while Cineworld rocketed 9.8 per cent, or 5.62p, to 62.94p.

But the unfettered optimism that has gripped the market at times was tempered somewhat yesterday by the surge in Covid cases to the highest since mid-January. 

Warnings from scientists that there could be worse to come, and hundreds of thousands of ‘pings’ from Covid apps that will force people to self-isolate, also put the grand reopening in a different light.

Micro Focus announced it settled a three-year patent dispute with rival Wapp Tech with a £49million payment, which was slightly less than it had expected to spend. 

Wapp Tech brought a claim against the software group in July 2018. Shares in Micro Focus – which said the costs will be recognised as a one-off in its half-year results – initially made gains but later closed down 1.2 per cent, or 4.8p, at 402.2p.

Bitcoin miner Argo Blockchain got a boost from unsubstantiated rumours on social media that Tesla has bought a stake in the company. 

The electric car maker’s founder Elon Musk has championed crypto-currencies but there was no word from him or from Argo by the close as to whether it was anything more than hearsay.

Argo shares rose 17.5 per cent, or 15.2p, to 102p.