Mining giant Rio Tinto (RIO, RIO.AX,RIO.L) said late Tuesday that it will invest a further $3.4 billion to expand its iron ore operations in the Pilbara region of Western Australia so as to meet growing demand from Asian markets. The company intends to boost iron ore operations in the Pilbara by 50 percent.
Rio Tinto said that of the total investment, it will spend $2.2 billion on work to extend the life of the Nammuldi iron ore mine. The company noted that with the funding, the project to increase production capacity in the Pilbara to 283 million tonnes a year or Mt/a has been fully approved.
Rio Tinto will also invest $1.2 billion on early works needed at the Cape Lambert port and rail facilities to boost capacity to 353 Mt/a by the end of the first half of 2015. However, the 353 Mt/a expansion is in final feasibility study, and Rio Tinto expects a final investment decision later in 2012.
Rio Tinto's share of the total investment will be $2.9 billion, with minority partners investing the remaining $500 million.
Sam Walsh, Rio Tinto Iron Ore and Australia chief executive said, "Today we are announcing another significant milestone in our drive towards a more than 50 per cent increase in the size of iron ore operations in Western Australia. The programme remains on track and we are bringing new iron ore production on stream at a time when demand from Asian markets is forecast to grow strongly, while industry supply growth remains constrained."
Rio Tinto, which currently produces 225 mt/a from the Pilbara operations, said it expects to reach production capacity of 283 Mt/a in the Pilbara by the end of the second half of 2013. The company noted that the Nammuldi expansion will deliver first ore in the third quarter of 2014, and there will be a transitional period until then in which ore will come from other mines to reach 283 Mt/a
Rio Tinto noted that the Nammuldi project will extend existing mining below the water table, increasing the mine's life by 14 years.
Those works and plans remain subject to a number of joint venture and regulatory approvals, including environmental clearances, which are expected later in 2012, Rio Tinto said.
Earlier in the day, Rio Tinto's rival BHP Billiton (BHP, BBL, BLT.L,BHP.AX) reported a 5.5 percent decline in profit for the half year ended December 31, 2011. The company's profit for the half-year period declined to $9.94 billion or $1.86 per share from $10.52 billion or $1.89 per share in the year-ago period. However, revenues for the period grew 9.7 percent to $37.48 billion from $34.17 billion in the prior-year period.
RIO closed Tuesday's trading at $61.34, down $1.03 or 1.65 percent on a volume of 3.26 million shares.
by RTT Staff Writer
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