Rio Tinto to accelerate $676m iron ore expansion plans on growing demand
RIO Tinto will spend US$676m (£418m) to speed up its iron ore expansion plans in western Australia, benefitting from strong demand as new supplies from other miners continue to lag behind.
The mining group said yesterday it intends to bring forward work on its mines, ports and railways by six months, increasing its annual capacity in the Pilbara region by 50 per cent from 220m to 333m tonnes by 2015.
“Thanks to this faster pace of expansion we will be bringing extra tonnes to the market earlier,” Sam Walsh, the chief executive of Rio Tinto Australia said in a statement.
“The demand outlook continues to be strong with supply lagging elsewhere in the industry and we are seeing new supplies proving slower than predicted.”
Fortescue Metals Group, Rio Tinto’s larger rival in the Pilbara region, also announced plans recently to triple its iron ore capacity to 155m tonnes.
Rio Tinto has also said that it would need to spend $2.6bn to bring on new production at the Marandoo and Hope Downs mines to replace other mines in decline. It flagged two projects, Yandicoogina Junction South West and Western Range, that would require extra “sustaining capital”.
The plans are not expected to add any overall cost. London-listed shares in Rio Tinto closed at 4,111.50p, down 0.78 per cent.