Rio Tinto brings forward $676M iron ore investment
CANBERRA, Australia (AP) — Anglo-Australian mining giant Rio Tinto said Wednesday it is accelerating its expansion of iron ore operations in northwest Australia by bringing forward a $676 million investment in port and rail construction as well as buying equipment.
The announcement that completion date for the five-year project to increase iron ore production by 50 percent will be brought forward by six months to early 2015 comes after the group signed profit-sharing deals with five Aboriginal groups that will allow mining on their traditional lands in the Pilbara region of Western Australia state.
Rio Tinto, the biggest iron ore miner in the resource-rich Pilbara, said in a statement its share of the new investment is $350 million. Partners will contribute the remainder.
The London and Melbourne-based mining group said the investment will bring forward the target of annually producing 367 million tons of iron ore (333 million metric tons). A total of more than $10 billion is being invested in the overall project.
Iron ore rivals coal as Australia's most lucrative export and is driven by China's burgeoning manufacturing sector.
Rio Rinto chief executive Sam Walsh said the company would take advantage of strong demand by bringing more ore to the market earlier.
"The demand outlook continues to be strong with supply lagging elsewhere in the industry and we are seeing new supplies proving slower to materialize than predicted," Walsh said in a statement.
"We are taking the opportunity to bring forward the next phase of our major capacity expansion to reap the benefits early and at no additional cost," he said.
The announcement failed to boost Rio Tinto shares on the Australian market, which dropped along with other mining stocks. Rio Tinto fell 18 Australian cents to AU$80.03 ($85.71). The benchmark S&P/ASX 200 index was down 0.2 percent.
The port works mostly include extra accommodation, dredging, marine works and stockyard earth works and the purchase of equipment.
The rail funding will enable early engineering and faster procurement of items such as rail plant, Rio Tinto said.
The Aboriginal land deal gives the group access to an additional 27,000 square miles (71,000 square kilometers) of the Pilbara.