Rio Tinto Iron Ore Business

Rio Tinto committed USD 4.2 billion to Develop Iron Ore Business

06/21/2012 | Editor: Marcel Dröttboom

Rio Tinto is taking the next steps in its phased investment programme by committing USD 4.2 billion to develop its tier one iron ore business.
Rio Tinto is taking the next steps in its phased investment programme by committing USD 4.2 billion to develop its tier one iron ore business. (Picture: Rio Tinto)

Rio Tinto is taking the next steps in its phased investment programme by committing USD 4.2 billion to develop its tier one iron ore business. The investment covers USD 3.7 billion for expansion of the Pilbara iron ore operations, Australia, and USD 501 million for further infrastructure development at the Simandou iron ore project in Guinea.

London, United Kingdom – According o Rio Tinto, the compay is tightly managing its overall investment programme, retaining flexibility and taking steps to reduce and re-phase capital expenditure as appropriate. The project approvals announced today do not affect the previously announced capital expenditure outlook of USD 16 billion in 2012.

The USD 4.2 billion (100 per cent basis USD 6.2 billion) comprises:

Pilbara 353 million tonnes a year iron ore expansion project and mine life extension, Western Australia

Rio Tinto investment of USD 2.0 billion (100 per cent basis USD 3.5 billion) over the next four years to complete the port and rail elements of the project to expand iron ore production capacity in the Pilbara to 353 million tonnes a year in the first half of 2015. Of the total USD 3.5 billion investment for this infrastructure expansion, USD 2.9 billion will be used for an additional two berths on the new Cape Lambert jetty and wharf, the replacement of the existing original Cape Lambert rail car dumper, and the Rail Capacity Enhancement project which includes a significant amount of rail track duplication and rolling stock improvements. USD 570 million will be spent on a new gas-fired power station at Cape Lambert, which will be more energy-efficient and produce significantly lower carbon emissions than its predecessor.

A further USD 1.7 billion (Rio Tinto share 100 per cent) of largely sustaining capital expenditure to extend the life of the Yandicoogina mine in the Pilbara to 2021 and expand its nameplate capacity from 52 to 56 million tonnes a year. A wet processing plant will also be added in order to maintain product specification levels and provide a platform for future potential expansion. Extending the life of Yandicoogina demonstrates how Rio Tinto can derive additional value from its existing tier one Pilbara assets.

The key component of the project still requiring approval is further mine production capacity. The expansion is subject to a number of West Australian Government and joint venture partner approvals.

The expansion of the Pilbara iron ore business to 353 million tonnes a year consists of the following stages:

  • 225 million tonnes a year by Q1 2011 - Dampier port debottlenecking (complete)
  • 230 million tonnes a year by end Q1 2012 - Dampier port incremental (complete)
  • 283 million tonnes a year by Q4 2013 - Cape Lambert 53 million tonnes a year increment (in implementation)
  • 353 million tonnes a year in H1 2015 - Cape Lambert 50 million tonnes a year increment and car dumper replacement 20 million tonnes a year increment (infrastructure approved)

Simandou iron ore project, Guinea

Rio Tinto investment of USD 501 million (100 per cent basis USD 1 billion) in detailed design studies, early works and long-lead items. This is primarily for rail and port infrastructure with first commercial production planned for mid-2015. In Simandou, Rio Tinto plans staged funding approvals with its partners for a progressive ramp up of the operation which will become a long-life, low-cost operation producing one of the highest grade iron ores on the market.

Timing of the ramp up is dependent on receiving necessary approvals from the Government of Guinea and on the Government of Guinea progressing and finalising its financing strategy.

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