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Rio Tinto’s Pilbara iron ore expansion in gathers steam

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Rio Tinto has again demonstrated its faith in Asia’s growing demand for iron ore by committing $US3.4 billion ($A3.16 billion) to expand its operations in Western Australia’s Pilbara region.

The mining giant is investing more than $US18 billion ($A16.72 billion) over the next five years expanding its iron ore mining operations and export facilities in the Pilbara by around 50 per cent to 353 million tonnes per annum (Mtpa) by 2015 from 225Mtpa currently.

The expansion, which will be over several stages, is the largest integrated mining project in Australian history.

“The program 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 iron ore chief executive Sam Walsh said in a statement.

Rio Tinto said it would spend $US2.2 billion ($A2.04 billion) extending the life of its wholly owned Nammuldi mine by 14 years by the second half of 2013, which would increase the company’s annual production capacity in the Pilbara to 283Mtpa.

Rio Tinto also said that $US1.2 billion ($A1.11 billion) would be spent on early works for the planned expansion of the Cape Lambert port and rail facilities to 353Mtpa.

The port is owned by Robe River Iron Associates, a Rio Tinto-controlled joint venture with Japanese firms Mitsui Iron, Nippon Steel and Sumimoto Metal.

Rio Tinto’s share of the port spend is $US700 million ($A650.13 million).

Mr Walsh said the financial commitments announced on Wednesday were another significant milestone in the miner’s drive towards a more than 50 per cent increase in the size of its WA iron ore operations.

The announcement follows on from Rio Tinto’s commitment in September to contribute the lion’s share of a $US833 million ($A773.66 million) power and fuel supply program in the Pilbara, which is being implemented and will support the ongoing expansion.

Rio Tinto expects iron ore production in the Pilbara to hit 230Mtpa by the end of the March quarter and 283Mtpa by the end of 2013.

A further expansion to 353Mtpa is in the final feasibility study stage, with a decision to proceed expected later this year.

The works and plans announced on Wednesday remain subject to joint venture and regulatory approvals expected later this year, Rio Tinto said.

Also on Wednesday, engineering and construction firm Decmil Group said it had been selected as the preferred contractor for certain civil works that form part of Rio Tinto’s expansion.

Shares in Rio Tinto were up 30 cents at $71.31 at 1504 AEDT while Decmil shares had gained nine cents, or 3.6 per cent, to $2.59 after earlier reaching $2.68.