Miners Rio Tinto and Antofagasta miss out on FTSE 100 rally amid China slowdown concerns

Mining giants Rio Tinto and Antofagasta missed out on Thursday’s rally in London-listed stocks, as concerns about a slowdown in the Chinese economy left the sector in the red. 

The FTSE 100 was up more than 1.5 per cent approaching midday on the back of Office for National Statistics data, which showed slowing inflation and drove interest rate peak expectations lower. 

Almost the entire blue-chip index was trading higher, with heavyweight miners among the few exceptions.  

Outlook: Anglo-Australian mining giant Rio Tinto expects to transport nearly 335 million metric tonnes of iron ore from its Pilbara operations in Western Australia this year

This was despite Rio Tinto telling investors it expects annual iron ore shipment levels to be towards the higher end of forecasts despite highlighting concerns about the global economy.

The Anglo-Australian mining corporation expects to transport nearly 335 million metric tonnes of iron ore from its Pilbara operations in Western Australia this year.

Shipment volumes dipped slightly in the second quarter due to a train derailment and maintenance at the group’s Dampier operations but were still 7 per cent higher at 161.7 metric tonnes over the first half of 2023.

Rio Tinto is the world’s biggest iron ore producer and relies heavily on exporting the commodity to China, where it is used in steelmaking, commercial and residential buildings, and other critical infrastructure projects.

The Chinese economy has experienced a slowdown since the boom caused by the end of lockdown restrictions, but this has now hit a wall.

The world’s second largest economy is facing shrinking exports, falling prices, fewer new building projects and worryingly high youth unemployment.

Rio Tinto said poorer steel demand and factory activity during the second quarter resulted in iron ore prices declining by 12 per cent.

Even as China’s central bank has lowered borrowing rates several times, the company cautioned that consumers remained tight with their spending habits.

Reflecting this weak economic sentiment, Rio Tinto shares have flatlined this year, having received a boost towards the end of 2022 as China eased Covid-related rules. They were 0.25 per cent lower at £50.97 on Wednesday morning.

Rio Tinto further warned that a recession in the US is likely given the Federal Reserve’s successive interest rate hikes, while the eurozone is hobbled by high inflation and weak manufacturing levels.

And while the FTSE 100 group’s outlook on iron ore production is optimistic, it has downgraded its full-year guidance for alumina and refined copper.

Jakob Stausholm, chief executive of Rio Tinto, said: ‘Production downgrades during the quarter highlight that we still have much more to do elsewhere.’

Fellow London-listed miner Antofagasta revealed on Wednesday that it generated 295,500 tonnes of copper during the first six months of 2023, a 10 per cent year-on-year increase. 

Yet like Rio Tinto, the company lowered its annual production guidance for the material to between 640,000 and 670,000 tonnes.

The Chilean-headquartered conglomerate blamed diminished water availability and delays in constructing the desalination plant and expanding the concentrator at the Los Pelambres mine. 

Antofagasta shares were 1.5 per cent lower at £14.85 on Wednesday morning.

This post first appeared on Dailymail.co.uk