Global iron ore shipments for the March quarter (on a 100% basis) were 80.8 million tonnes, down 12% on the December quarter, while production of 84Mt was down 4% due to “normal seasonal factors”.

Pilbara sales were 76.7Mt, 11% higher than the March quarter of 2015 due to brownfields and infrastructure expansions, but down from 86.5Mt in the December quarter.

Rio blamed seasonal restocking and the impact of Tropical Cyclone Stan, but said port inventories had returned to “optimum” levels.

The Nammuldi incremental tonnes project started production in the December quarter and the doubling of output to 10Mt per annum is expected by the fourth quarter.

A decision on the development of the Silvergrass mine has been scheduled for the second half of the year.

While the Cape Lambert power project is progressing to plan, Rio reported delays to the implementation of its AutoHaul automated train system.

Over 75,000km of mainline trials have been completed and testing and verification is continuing.

Rio left its global shipment guidance of 350Mt for 2016 unchanged, but warned that delays to AutoHaul would result in Pilbara production of 330-340Mt next year, down from the expected 350Mt.

The downgrade comes as Citi yesterday warned that the reason rally in iron ore would likely be short-lived due to increasing production.

“The delays to the implementation of the AutoHaul system could help to remove some additional iron ore from a market which already appears oversupplied and therefore may in fact prove convenient for Rio,” RBC Capital Markets analyst Paul Hissey said this morning.

Meanwhile, Rio’s mined copper production for the quarter jumped 27% to 141,200 tonnes due to grade increases at Kennecott Utah, ramp-up of Escondida’s new concentrator, and mill improvements at Oyu Tolgoi.

Aluminium production of 887,000t was up 3% on the December quarter and 10% higher than the March 2015 quarter due to the ramp-up at Kitimat.

Bauxite and alumina production was also higher than the same time last year.

Outgoing Rio CEO Sam Walsh said the aluminium product group was one of the areas that had recorded “notable improvements”.

“However, we continue to experience volatility in commodity prices across all markets,” he said.

“In the face of a testing external environment, our focus remains on delivering further cost and productivity improvements, disciplined capital management and maximising free cashflow, to ensure that Rio Tinto remains strong.”

Pre-tax and pre-divestment exploration and evaluation expenditure for the quarter was $US128 million, in line with last year, with the bulk of expenditure going to the exploration, diamonds and minerals, and copper and coal divisions.

Shares in Rio rose 2% to $A48.41.