Rio Tinto says it has the global supply chain leverage to manage steep diesel price rises, but smaller iron ore miners are at greater risk of capitulating to fuel pain.

The mining giant has maintained full-year production cost guidance across its operations, including iron ore mines in the Pilbara region of Western Australia that provide the lion’s share of its earnings and export dollars.

Rio said on Tuesday that it used about 1.6 billion litres of diesel a year, including more than 1 billion litres in the Pilbara, but could manage the fuel bill and maintain supply.

It was paying about US60c (83.6c) a litre for diesel in the Pilbara mines a year ago, and although the price has since doubled, every $US10 increase per barrel of oil adds just US15c a tonne to iron ore production costs.

“Despite higher diesel prices steepening the cost curve, our cost position is resilient, underpinned by scale and global supply chain leverage,” Rio said in releasing production results for the three months to March 31.

The miner’s core iron ore, aluminium, copper and lithium operations remained largely unaffected by the conflict in Iran and on-and-off blockades of the Strait of Hormuz.

“On the supply side, the direct impacts on our operations have been limited, while our commodity prices have responded favourably,” it said.

“We continue to monitor the evolving global impact closely and have contingency plans in place. However, we have relatively limited visibility of how the ongoing conflict will affect supply chains in the second half (of 2026).”

Rio is tipping a tougher time for iron ore miners with higher production costs and without the scale of its Pilbara neighbours, BHP and Fortescue.

“Higher energy costs are resulting in a lifting of the global iron ore cost curve, particularly for higher-cost suppliers whose cost base is typically more sensitive to the diesel price,” Rio said.

Iron ore miner Fenix Resources warned last month that diesel supply problems were starting to bite in the wake of fallout from Cyclone Narelle hitting the WA coast and ports.

Chamber of Minerals and Energy WA chief executive Aaron Morey said most of the lobby group’s members – which include the iron ore heavyweights and scores of mid-tier miners – were better off for diesel supply now than they were in March.

“We actually have a better situation now on the ground in areas like the Goldfields and the Mid West than we had in March, but we’re not through this global energy crunch,” he said.

Mr Morey urged governments to stay focused on the issue, warning that any diesel shortage would quickly lead to mine closures and job losses.

Rio confirmed on Tuesday that it was playing catch-up on iron ore production guidance after an estimated billion-dollar-plus hit to revenue from Cyclones Narelle and Mitchell.

In the case of Cyclone Narelle, it also battered production at both of Rio’s bauxite mines in Queensland, leaving a trail of destruction across the top of Australia before crossing the WA coast just south of the Pilbara.

Rio, which abandoned merger talks with Glencore during the quarter, pointed to production growth in copper over the three-month period and the strength of its aluminium business and higher pricing for both commodities.

Rio boss Simon Trott also highlighted $US650m ($906.2m) in annual cost-cutting measures rolled out since he took the helm in August.

The company is yet to make any meaningful comment on the fallout from last week’s Supreme Court ruling in the stoush between billionaires Gina Rinehart and Angela Bennett and her family.

Both women, through their private companies, are partners in Rio iron ore mines or projects, and the ruling leaves Rio liable for a big payout of retrospective royalties.

Analysts at Barclays said the fallout from the Middle East conflict was a net positive for Rio via its aluminium business, which is benefiting from strong US premiums well in excess of tariff levels.

The broker also noted Rio was net long in sulfuric acid in the US via the Kennecott copper operations; oil and related energy costs were a “marginal headwind”.

Barclays said iron ore tended to be well-supported during geopolitical and macro black swan events, which typically saw limited to no impact on China’s domestic steel production.

“We expect China steel production could benefit from additional infrastructure spend if the government sees downside risks to economic growth from a weaker external environment,” it said in a note to clients.

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