Rio Tinto To Spend $4.2B To Support Expanded Iron Ore Operations in Australia, Guinea
Anglo-Australian mining giant Rio Tinto is poised to spend $4.2 billion to support increased iron ore output from its mining operations in Australia and Guinea amid global concerns of a manufacturing slowdown in China, the world's biggest consumer of the steelmaking key ingredient.
In a statement on Wednesday, the company said it allocated $3.7 billion to improve an existing mine, construct new port berths as well as widen railways in its projects in Western Australia to meet increased projections of iron ore output to 353 million metric tonnes a year by 2015.
The remaining $501 million will be spent in Guinea to build a rail and port at its Simandou project which is being developed with Aluminium Corp. of China Ltd. (ACH).
"We are directing investment to projects that will generate the most attractive returns for shareholders and are resilient under any probable macroeconomic scenario," Tom Albanese, chief executive of London-based Rio Tinto, said in the statement.
The world's second-largest miner of iron ore after Brazil's Vale, Rio Tinto currently produces 230 million tonnes annually of the key steelmaking ingredient. Mechanisms to increase this to a further 283 million metric tonnes had been put in place. With the projected rate of 353 million metric tonnes, Rio Tinto's Australian mines thus be equipped to feed nearly a third of the world's demand for iron ore.
"We continue to see positive prospects for medium- to long-term iron ore demand driven by ongoing growth in Chinese consumption," Sam Walsh, chief executive officer of Rio's iron ore unit, said, noting the company expects China to boost its output of the raw commodity by 43 per cent to 1 billion metric tonnes by 2030, from the current 700 million metric tonnes, spurred by the continuing urbanisation of the world's second-largest economy.