Anglo-Australian miner Rio Tinto has capitalized on near record-low yields to slash debt costs as company bond sales in the US this month reached $40 billion while Australia’s market remains frozen.

The world’s second-biggest mining company has sold US$500 million of five-year, US$1.15 billion of 10-year and US$350 million of 30-year SEC-registered notes. Bank of America Merrill Lynch indexes show US industrial corporate notes yield an average 3.5 percent, or 2.4 percentage points less than Australian counterparts.

The five-year notes pay a coupon of 2.25 per cent and will mature on 20 September 2016. The 10-year notes pay a coupon of 3.75 per cent and will mature on 20 September 2021.The 30-year notes mature on 2 November 2040 and constitute a further issuance of the US$500 million 5.20 per cent notes due 2040 that were issued on 2 November 2010 and the US$300 million 5.20 per cent notes due 2040 that were issued on 20 May 2011. Upon issuance of the bonds, US$1.15 billion of the 5.20 per cent notes due 2040 will be outstanding.

The miner also yesterday announced plans to invest US$833 million in major power and fuel supply projects as part of its drive to substantially increase iron ore production capacity in Western Australia.

Rio Tinto's integrated Pilbara power and gas network will be upgraded with a US$520 million investment and a further US$313 million will be allocated to fuel infrastructure facilities.

The resource giant said the projects are needed to support annual production capacity of 283 million tonnes (Mt/a), a milestone Rio Tinto has targeted for 2013. The fuel infrastructure project will also help support the next phase of potential expansion, to 333 Mt/a in 2015.

Sam Walsh, chief executive Iron Ore and Australia said "This investment marks yet another significant step towards the expansion of iron ore production by 50 per cent in the five years to 2015, a timeline we recently brought forward by six months. These projects provide certainty in meeting our power and fuel supply requirements, both now and into the future."