Rio Tinto Group said iron ore shipments from Western Australia edged higher in the second quarter even after a rail disruption in May and muted Chinese demand, but warned full-year copper output would be at the lower end of its guidance range.

The global miner said China was supported by a recovery in manufacturing and “more resilient exports,” but also pointed to a property sector still under pressure, with “muted” domestic demand and risks of overcapacity in some industrial sectors.

Mined copper output would be around 660,000 tons, at the bottom end of a range that goes up to 720,000 tons, it said in a filing on Tuesday. A disruption to operations at the Kennecott mine in Utah would crimp supply, said Rio, the world’s No. 2 miner by market capitalization.

The company’s share price fell as much as 2.6% in Sydney on Tuesday.

 “We see good long-term value in Rio shares, although we are concerned about downside risk to iron ore prices,” Jefferies LLC analyst Christopher LaFemina said in a note. “Growth in copper and higher prices for copper and aluminum should partially offset the negative impact of lower iron ore prices.”

Iron ore prices have dropped by more a fifth this year, largely due to a lack of demand from China’s property market. Prices are likely to remain above $100 a ton this year, but could decline from 2025 on a wave of new supply including from Rio’s Simandou iron ore project in Guinea.

All conditions have now been satisfied for Simandou, one of the world’s largest iron ore deposits, to be developed, including the Guinean and Chinese regulatory approvals, the miner said. The Simfer mine at the project is on track to deliver first production in 2025, ramping up over 30 months to an annualized capacity of 60 million tons a year, it said. 

Rio exported 80.3 million tons of iron ore over the three months through June, even as a rail collision during the period resulted in six days of transport disruptions. Guidance for its Pilbara operations for the full year remains between 323 to 338 million tons with cash costs of $21.75 to $23.50 per ton. 

The Chinese “government has provided additional measures for the property market to destock the large inventory overhang,” Rio said. “However, housing activity remains weak.”

Copper Output

The production of copper rose, helped by a 23% increase in output at the Oyu Tolgoi underground mine in Mongolia. Higher grades of ore from Escondida in Chile also contributed to overall output of the red metal climbing by 18% to 171,000 tons. 

Iron ore still generates around 60% of the miner’s revenue, but Rio it’s making progress in diversifying its output. “We are growing with discipline in the materials the world needs for the energy transition,” Chief Executive Officer Jakob Stausholm said in the statement.

The miner said it’s on track to begin production at its Rincon lithium project in Argentina, and is also moving ahead with mines for the battery metal in Canada and Serbia.

Rio said aluminum production rose by 1% to 824,000 tons, but lowered its full-year alumina production target to 7 to 7.3 million tons from 7.6 to 7.9 million tons due to natural gas supply issues.

(Updates with analyst comment in 5th paragraph and additional details throughout)

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