Rio Tinto, the Anglo-Australian mining giant, has issued a bleak outlook statement alongside a second-quarter trading update that only narrowly met market expectations.
The FTSE 100 company said the global economy was “weakening due to the Russia-Ukraine war, tighter monetary policy to curb rising inflation, and targeted Covid-19 restrictions in China”, the main market for much of the metals it produces.
It also pointed to “supply bottlenecks” in the eurozone, where there were also “higher inputs costs and weakening consumer sentiment” with “energy security” a “key priority” for the region.
“Trade disruptions, food protectionism and the global focus on securing energy supplies continue to put pressure on supply chains, which will need to be significantly eased before inflationary pressures subside,” the company said.
Its update came as China’s reported only narrow economic growth of 0.4% in the second quarter, as the country’s zero-Covid policy took a toll.
Rio said industrial activity in China “troughed in May” due to lockdowns there, and while it picked up in June, “ headwinds are considerable from restricted labour and goods movement.”
It said copper prices fell 20% over the second quater on the London Metal Exchange, having touched a record average in the first quarter. But demand started to falter in April, as uncertainty surrounding the global economy grew.
Aluminium production fell 10% year-on-year in the second quarter. Mined copper production rose 9%.
Rio’s shares fell by 2.5% to 4448p in morning trade in London on Friday, the second biggest fall on the FTSE 100.