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Pilbara operations: Pilbara operations produced 155.7 million tonnes in the H1 of 2019, 8% lower than the same period in 2018. As highlighted in our Q1 Operations Review, significant disruptions were caused by Tropical Cyclone Veronica, and a fire at Cape Lambert A. The impacts of Cyclone Veronica continued into the second quarter, with repairs to the Cape Lambert A port facilities impacting Robe Valley and Yandicoogina shipments and operations. All repairs are now complete.
As announced on 19 June 2019, mine operational challenges are being experienced, particularly at our Greater Brockman hub. This has seen shortfalls in planned material movement and impacted mine sequencing both in the Greater Brockman hub and in the broader system. Waste material movement will be increased over 2019 and 2020 to improve mine performance and pit sequencing. Cost guidance has been revised to include these additional mining activities.
First half sales of 154.6 million tonnes were 8% lower than the first half of last year due to lower mine production and damage to the port facilities caused by the cyclone.
Approximately 16% of sales in the first half of 2019 were priced by reference to the prior quarter’s average index lagged by one month. The remainder was sold either on current quarter average, current month average or on the spot market. We continue to prioritise meeting our long-term customer commitments.
Approximately 33% of sales in the first half were made free on board, with the remainder sold including freight.
Achieved average pricing in the first half of 2019 was USD 78.5 per wet metric tonne on an FOB basis which equates to USD 85.3 per dry metric tonne. Pilbara Blend sales included an additional 2.4 million tonnes of alternate products in the Q2, bringing the total alternate product sales in the H1 of 2019 to 3.9 million tonnes.
Pilbara projects
The Koodaideri iron ore mine is progressing to plan with engineering, procurement and construction activities on schedule, including the ramp-up of the mine bulk earthworks and commencement of rail bulk earthworks. First ore from Koodaideri is expected in late 2021, consistent with previous guidance.
The Robe River Joint Venture sustaining production projects are progressing through the necessary environmental and heritage approval process. MesaH environmental approvals have experienced some delays, with contingency plans being assessed in case required. Consistent with previous guidance, first ore from these projects is anticipated in 2021.
2019 guidance
As announced on 19 June 2019, Rio Tinto’s Pilbara shipments in 2019 are expected to be between 320 and 330 million tonnes, 100% basis. Guidance will remain subject to weather. Major rail maintenance is scheduled to occur in October, and is reflected in the existing guidance.
Rio Tinto’s Pilbara unit cost guidance in 2019 has been revised to USD 14 – USD 15 per tonne, which incorporates costs for the additional waste movement in the mines in the second half, and the overall reduction in shipments.