MARKET REPORT: Rio Tinto haunted by Aboriginal cave blast scandal

MARKET REPORT: Rio’s iron ore production slumps as miner struggles with rain, labor shortages and fallout from Aboriginal cave scandal

Heavy rainfall, labor shortages and taking greater steps to protect cultural heritage have all struck Rio Tintos iron ore output.

The amount of the main metal – used to make steel – shipped by the FTSE 100 group fell 12 percent in the three months to June compared to last year. This translated to about 76 million tons.

Terrible weather sometimes brought operations to a halt and it struggled to get qualified staff due to Covid.

Triple whammy: The amount of iron ore shipped by the Rio Tinto group fell 12 percent in the three months to June compared to last year. This translated to about 76 million tons

But the loss of about 2 million tons of shipments came as Rio worked to rebuild 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 it has changed mining plans this year and added a number of buffers and exclusion zones in the areas where it operates “to protect areas of high cultural importance.”

Boss Jakob Stausholm said that since the devastation in the Juukan Gorge, Rio has “considered the magnitude of what has been lost through our actions, and that the pain we have caused will never be forgotten.”

Stock Watch – Luceco

Lighting manufacturer Luceco surpassed sales expectations as the boom in home renovations that began during the initial Covid lockdown continued rapidly.

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

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

The profit was £19 million on projections of £18 million.

Shares of the group, which expects annual profits to also exceed forecasts, rose 3.2 percent, or 12p, to 393p.

After the difficult quarter – which also saw copper production dwindle – Rio said it now believes its iron ore production will be at the lower end of a guided range of 325 million to 340 million tons for the year.

Fortunately for Rio, rising iron ore prices will likely mean lower production won’t be felt too sharply. The metal, which is imported in large quantities from China, is currently worth $220 per tonne, doubling in value since December.

Prices of other key metals such as copper have also risen since Covid struck and are gaining ground as the global economy begins to recover and raw materials are in high demand.

But shares of Rio (down 3.4 percent, or 211p to 5931p) fell yesterday, along with the Footsie’s other heavyweight mining companies, as prices of several commodities fell during that day’s trading session.

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

The FTSE 100 closed 0.06 percent, or 3.93 points, to 7008.09 after failing to hold on to early gains. The FTSE 250 fell 0.2 pc, or 34.25 points, to 22467.

While it failed to catch on in the broader market, shares of several companies saw a Freedom Day rally as traders waited for the easing of Covid restrictions in England on Monday.

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

But the unbridled optimism that has sometimes gripped the market was dampened somewhat yesterday by the rise in Covid cases to its highest point since mid-January.

Scientists’ warnings that worse could be coming, and hundreds of thousands of ‘pings’ from Covid apps that will force people to self-isolate, also cast the grand reopening in a different light.

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

Wapp Tech filed a claim against the software group in July 2018. Shares in Micro Focus — the expense of which will be included as a one-off in the half-year results — initially posted gains, but later closed 1.2 percent, or 4.8 percent. p, at 402.2p.

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

Elon Musk, the founder of the electric car maker, is a proponent of crypto currencies, but there was no report from him or from Argo as to whether it was more than rumours.

Argo shares were up 17.5 percent, or 15.2p, to 102p.