Rio Tinto to pump $3.4bn into iron ore
MINING giant Rio Tinto yesterday helped to give a boost to the mining sector as it announced a $3.4bn (£2.1bn) expansion in its iron ore operations in Australia.
The FTSE 100 company’s move is aimed at stepping up production by more than 50 per cent in anticipation of growing demand from China.
Rio, the world’s second largest iron ore producer, said it expects to boost output from its mines in Western Australia’s Pilbara iron belt to 283m tonnes a year by the second half of 2013, up from the current 225m.
That would represent about a fifth of current world trade in the key steel making ingredient.
By the end of March, Rio said it expects to lift its operating capacity to 230m tonnes per year. Only Brazil’s Vale mines produces more iron ore.
“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’s iron ore division chief Sam Walsh said in a statement.
Rio said its longer-term plan called for a capacity increase to 353m tonnes a year by the end of 2015.
The company’s share of the increased investment will be $2.9bn, with minority partners shouldering the remaining $500m.
The scale of the expansion means it will not be complete until 2015 and some environmental permits are still required.
Analysts at Numis said: “The major expansion continues as Rio keeps its nose well in front for iron ore growth.” Rival BHP Billiton yesterday reported a half year profit drop as it warned that the Eurozone debt crisis could hamper its growth.
Rio is due to release its full year results today.