28th Nov 2013 10:08
LONDON (Alliance News) - Rio Tinto PLC Thursday said it plans to invest USD400 million to increase its iron-ore production in Western Australia by 24% to 360 million tonnes a year.
The major metals and mining company said it plans a series of low-cost brownfield expansion programmes to feed into increasing levels of infrastructure currently being developed. Rio Tinto said that from a base run rate of 290 million tonnes per year by the end of 2014, it plans to expand by more than 60 million tonnes a year between 2014 and 2017.
Brownfield exploration focuses on existing operations, on land that is generally already owned and partly developed, as such it is often significantly lower cost than its counterpart greenfield exploration.
The company said the majority of the low-cost development will be achieved in the next two years with mine production of more than 330 million tonnes expected in 2015.
Rio Tinto said it will achieve its goals by expanding production at existing mines and securing further low-cost productivity gains, together with the development of its greenfield Silvergrass mine.
In line with the brownfield expansions, the company approved USD400 million of capital expenditure for plant equipment and modification, and additional heavy machinery for use at various mine sites in the Pilbara.
The additional production will be achieved at a capital intensity of USD120 to 30 a tonne, including low-USD100s a tonne as the Rio Tinto share, including the cost of infrastructure growth and mine capacity.
The company also noted that an investment decision on its Silvergrass site now has been deferred until the third quarter 2014 and its proposed Koodaideri greenfield mine has been deferred until 2016 at the earliest.
Rio Tinto said the phase two expansion of port, rail and power infrastructure in Western Australia to reach its 360-million-tonne-per-year production target is already underway and is scheduled for completion in the first half 2015.
The news comes after The Australian newspaper reported on Tuesday that Rio Tinto plans to cut back on its activities at the Gove alumina refinery in the Northern Territory.
The company ended negotiations with the Northern Territory and Commonwealth governments over subsidised gas supplies to keep the loss-making refinery open. It now will decide how to scale back the refinery and export bauxite rather than refine it into alumina, the national newspaper said.
Government, industry and Aboriginal figures expect a massive blow to the refinery's 1,500 strong workforce, which includes many indigenous employees, The Australian said. The nearby town of Nhulunbuy, which relies on the refinery for power, housing and employment, also will be hugely affected.
These groups expect a USD400 million loss to the Northern Territory economy, the newspaper said.
The Gove refinery, which refines bauxite from local deposits into alumina, is losing USD30 million a year and has been subject to negotiations over gas supplies and federal and Territory government incentives for years.
Rio Tinto shares were up 2.8% to 3,228.50 pence, making them the biggest gainer in the FTSE 100 Thursday morning.
By Tom McIvor; [email protected]; @TomMcIvor1
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