Rio Tinto's iron ore shipments fell 12 percent in the second quarter and the crown of the world's largest producer may change hands again

Global mining giant Rio Tinto Group Ltd. reported Friday that iron ore shipments fell 12% in the second quarter from a year earlier as stormy weather affected its operations in Western Australia.However, the company is still expected to report strong returns later this month because of soaring prices for iron ore, the raw material for steel casting.

Rio Tinto said it expected its iron ore shipments in 2021 to be near the lower end of its guidance range of 325m-340m tonnes, potentially relinquishing its crown as the world's largest iron ore producer to arch-rival Vale of Brazil.

Vale is due to release its production figures later this month.Vale is on track to ship iron ore at the upper end of its guidance range of 315m-335m tonnes in 2021, according to UBS.Vale officially lost its position as the world's largest iron ore producer to Rio Tinto in 2019, when it faced multiple investigations after a tailings dam burst that rocked the industry.

According to its latest report, Rio shipped 76.3m tonnes of iron ore in the three months to June 30, down from 86.7m tonnes in the same period last year but slightly above UBS's estimate of 76m tonnes.

"We would have liked to see higher production to take advantage of higher iron ore prices.That said, Rio is still expected to generate strong cash during its results, "said DavidLennox, an analyst at FatProphets in Sydney." Hopefully we'll get a good dividend and we're also looking to see if there's any share buybacks."

Iron ore prices surged to an all-time high of more than $230 a tonne in May, helped by China's infrastructure build-up after overcoming the epidemic.

Rio Tinto is expected to report first-half operating income of $10.9 billion on July 28, more than double the $4.75 billion it reported in the same period last year, according to a survey of 14 analysts by Vuma.

Rio also raised its full-year iron ore production cost guidance on Friday because of higher labor and input costs.The mining giant expects unit costs to be $18.0 - $18.5 a tonne this year, up from its previous forecast of $16.70 - $17.70 a tonne.

Australia's major miners have been facing a Labour shortage as the country has closed its international borders because of the outbreak and states have imposed blockades.Rio also said it would delay commissioning of its ongoing Gudai-Darri project until later this year, and that it would delay the first production of its Winu copper mine in Australia from an initial estimate of 2023 to 2025, in part because of containment measures.