* Rio Tinto Q1 iron ore shipments down 8 pct vs Q4
* Production up 16 pct on same quarter a year ago
* Keeps guidance for output of 295 million tonnes in 2014
(Adds analyst comment, BHP forecast, details)
By James Regan
SYDNEY, April 15 Rio Tinto's
iron ore shipments fell 8 percent in the first-quarter from the
previous quarter due to weather-related disruptions in Australia
and Canada, but the miner said it was on track to meet its
Production still jumped 16 percent on the same quarter a
year ago as the world's No. 2 iron ore producer behind Brazil's
Vale ramps up production at its Australian mines to
meet growing demand from China.
"It appears they were hit a litle harder than we expected by
the weather, though we don't see any issues in meeting their
full-year target," said RBC Capital Markets analyst Chris Drew.
Iron ore has replaced other industrial and precious
commodities such as coal, gold and silver as the mineral with
the most profit potential, delivering bumper earnings for giant
low-cost miners such as Rio and BHP Billiton.
Iron ore prices .IO62-CN=SOI have recovered 12 percent
since a steep dip in March on weaker Chinese steel prices. At
the current price of $117 a tonne, Rio Tinto enjoys a profit
margin of over $60 a tonne.
Rio Tinto Chief Executive Sam Walsh has repeatedly deflected
criticism the company is too dependent on iron ore - accounting
for almost half of the company's 2013 revenue - saying China
will continue to buy all the ore it can mine for years to come.
Walsh was promoted to chief executive in 2013 to whip the
company into shape following disastrous investments in aluminium
and coal that led to $14 billion in write-offs.
Rio Tinto said its Iron Ore of Canada division was hit by a
colder-than-average winter, which disrupted mining in Labrador
over the quarter, while port closures due a cyclone late last
year reduced shipments in Australia, the company said.
Overall iron ore shipments in the first quarter came in at
66.7 million tonnes.
Rio said it was on track to meet its target of mining ore at
the rate of 290 million tonnes a year and maintained its 2014
production target of 295 million tonnes.
It planned to draw on its Australian stocks of iron ore to
increase shipments ahead of production, with around 5 million
tonnes of inventory drawdown expected in 2014.
Iron ore of Canada (IOC) is 59 percent owned by Rio Tinto,
26 percent by Mitsubishi Corp and 15 percent by
Labrador Iron Ore Royalty Co.
Rio Tinto put its stake in IOC up for sale about a year ago
but offers came in well below the mining group's target of about
$3.5 to $4 billion, sources said.
Production of 295 million tonnes in 2014 would keep Rio
Tinto ahead of rivals BHP Billiton and Fortescue Metals
Group, which report quarterly data on Wednesday.
BHP is also expected to show lower shipments in the
March quarter after Cyclone Christie barreled into Australia's
Pilbara iron ore belt in late 2013 disrupting rail and port
shipping operations into January.
UBS forecasts BHP's Australian operations, including shares
to joint venture partners will see a modest drop in first
quarter production to 53 million tonnes against 53.6 million in
the fourth quarter.
(Editing by Richard Pullin)