Mining giant Rio Tinto has committed a further $3.4bn to the expansion of its Pilbara iron ore operations in western Australia.
Some $2.2bn will be invested to extend the life of the Nammuldi iron ore mine, which is expected to increase production capacity in Pilbara to 283m tonnes a year (Mt/a) by the second half of 2013.
A further $1.2bn (of which Rio will pay $0.7bn) will be used for Cape Lambert port and rail early works need for the proposed capacity expansion to 353 Mt/a. The 353 Mt/a expansion is in final feasibility study, with a final investment decision expected later this year, Rio said.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The total amount payable by Rio will be $2.9bn.
"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," said Rio's Iron Ore and Australia Chief Executive Sam Walsh.
"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 estimates that the capital intensity of expansion from the current 220 Mt/a to 353 Mt/a will be in the mid-$150s per tonne, of which Rio will owe around $130 per tonne.
BC
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
