29th Nov 2018 06:27
LONDON (Alliance News) - Rio Tinto PLC on Thursday said it approved a AUD3.5 billion, about USD2.6 billion, investment in the Koodaideri iron ore mine in Western Australia.
The Anglo-Australian miner noted that Koodaideri will deliver a new production hub for the company's iron ore business in the Pilbara, incorporating a processing plant and infrastructure including a 166-kilometre rail line connecting the mine to the existing network.
Construction will start next year with first production expected in late 2021. Once complete, the mine will have an annual capacity of 43 million tonnes, underpinning production of the Pilbara Blend, Rio Tinto's flagship iron ore product.
Rio Tinto noted that Koodaideri Phase 1 will help sustain Rio Tinto's existing production capacity by replacing depletion elsewhere in the system. The project will increase the higher-value lump component of the Pilbara Blend, subject to market conditions, from the current average of about 35% to around 38%.
It is expected to deliver an internal rate of return of 20% and capital intensity of around USD60 per tonne of annual capacity, highly competitive for a new mine considering the additional infrastructure of rail spur, airport, camp and road access required.
"The investment is underpinned by an ore body of high-quality Brockman ore more than 20 kilometres long and three kilometres wide. In addition to mine infrastructure, an airport, mine support facilities and accommodation for employees will be built. Throughout the construction period Rio Tinto expects to employ over 2,000 people with 600 permanent roles created once the mine is operational," the company said.
Rio Tinto said a USD44 million pre-feasibility study into Koodaideri Phase 2 has also been approved. The expansion could increase annual capacity from the Koodaideri production hub to 70 million tonnes and beyond. A final investment decision is subject to study outcomes and Rio Tinto's value over volume approach.
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