(Bloomberg) --

Rio Tinto Group, the world’s top iron ore producer, reported a drop in shipments in the year’s first quarter amid “challenging” operating conditions, but signaled an improvement was expected in the second half. 

Total shipments from its iron ore operations in Western Australia’s Pilbara region were 71.5 million tons in the three months ended March 31, the company said in a statement on Wednesday, down 15% on the previous quarter and 8% lower from the year-before period. That compares with a median forecast of 73.1 million tons from five analysts.

The results come even as Rio is among commodity giants which have had a stellar year of profits, driven by soaring prices. Raw materials could rally further should investors boost their allocation at a time of rising inflation, according to JPMorgan Chase & Co. Iron ore futures in Singapore surged 32% in the first quarter amid rising demand expectations despite China’s campaign to tame prices.

“Production in the first quarter was challenging as expected, re-emphasizing a need to lift our operational performance,” Jakob Stausholm, Rio’s chief executive officer, said in a media statement. As the company starts to ramp up its Gudai-Darri project in Western Australia, “our iron ore business will have greater production capacity and be better placed to produce additional tons of Pilbara Blend in the second half,” he said.

©2022 Bloomberg L.P.