TIDMRIO
RNS Number : 7516F
Rio Tinto PLC
20 June 2012
Rio Tinto takes next steps in its iron ore development plans
20 June 2012
Rio Tinto is taking the next steps in its phased investment
programme by committing US$4.2 billion (100 per cent basis US$6.2
billion) to develop its tier one iron ore business. The investment
covers US$3.7 billion (100 per cent basis US$5.2 billion) for
expansion of the industry-leading Pilbara iron ore operations in
Western Australia and US$501 million (100 per cent basis US$1.0
billion) for further infrastructure development at the Simandou
iron ore project in Guinea.
Rio Tinto chief executive Tom Albanese said "We are directing
investment to projects that will generate the most attractive
returns for shareholders and are resilient under any probable
macroeconomic scenario. Our superior Pilbara iron ore business has
one of the highest margins in the industry, low capital intensity
of investment and a strong track record of completing projects on
time and budget.
"Today's announcement is in line with our long-held strategy of
investing in and operating long-life, low-cost, tier one assets,
and consistent with our view of the economic outlook. We are
mindful of short-term uncertainties, and remain fully committed to
a balanced approach to investment, while maintaining a single A
credit rating and a progressive dividend policy."
Rio Tinto is tightly managing its overall investment programme,
retaining flexibility and taking steps to reduce and re-phase
capital expenditure as appropriate. The project approvals announced
today do not affect the previously announced capital expenditure
outlook of US$16 billion in 2012.
Rio Tinto Iron Ore chief executive Sam Walsh said "We continue
to see positive prospects for medium- to long-term iron ore demand
driven by ongoing growth in Chinese consumption. We continue to
forecast that annual Chinese steel production will grow from its
current level of around 700 million tonnes to around one billion
tonnes a year out towards 2030. This demand growth is coupled with
an increasingly challenged supply response, as several high-profile
competitor projects have recently been either delayed or
postponed.
"Our Pilbara expansion is already well underway, positioning us
to capture the opportunities of this market environment. And we
have the natural advantages of a readily-expandable Rio
Tinto-operated port and proximity to the Chinese market.
"The investment we and our partners are making in Simandou takes
us a step further towards the phased development and ramp up of a
new world-class iron ore resource. Further investment will be made
as the Government of Guinea progresses its financing strategy and
grants approvals for the next steps in developing rail and port
infrastructure. The experience gained in expanding our Pilbara
operations will be invaluable as we develop Simandou."
The US$4.2 billion (100 per cent basis US$6.2 billion)
comprises:
Pilbara 353 million tonnes a year (Mt/a) iron ore expansion
project and mine life extension, Western Australia
Rio Tinto investment of US$2.0 billion (100 per cent basis
US$3.5 billion) over the next four years to complete the port and
rail elements of the project to expand iron ore production capacity
in the Pilbara to 353 Mt/a in the first half of 2015. Of the total
US$3.5 billion investment for this infrastructure expansion, US$2.9
billion will be used for an additional two berths on the new Cape
Lambert jetty and wharf, the replacement of the existing original
Cape Lambert rail car dumper, and the Rail Capacity Enhancement
project which includes a significant amount of rail track
duplication and rolling stock improvements. US$570 million will be
spent on a new gas-fired power station at Cape Lambert, which will
be more energy-efficient and produce significantly lower carbon
emissions than its predecessor.
A further US$1.7 billion (Rio Tinto share 100 per cent) of
largely sustaining capital expenditure to extend the life of the
Yandicoogina mine in the Pilbara to 2021 and expand its nameplate
capacity from 52 Mt/a to 56 Mt/a. A wet processing plant will also
be added in order to maintain product specification levels and
provide a platform for future potential expansion. Extending the
life of Yandicoogina demonstrates how Rio Tinto can derive
additional value from its existing tier one Pilbara assets.
The key component of the project still requiring approval is
further mine production capacity. The expansion is subject to a
number of West Australian Government and joint venture partner
approvals.
The expansion of the Pilbara iron ore business to 353 Mt/a
consists of the following stages:
1. 225 Mt/a by Q1 2011 - Dampier port debottlenecking (complete)
2. 230 Mt/a by end Q1 2012 - Dampier port incremental (complete)
3. 283 Mt/a by Q4 2013 - Cape Lambert 53 Mt/a increment (in implementation)
4. 353 Mt/a in H1 2015 - Cape Lambert 50 Mt/a increment and car
dumper replacement 20 Mt/a increment (infrastructure approved)
Simandou iron ore project, Guinea Rio Tinto investment of US$501
million (100 per cent basis US$1 billion) in detailed design
studies, early works and long-lead items. This is primarily for
rail and port infrastructure with first commercial production
planned for mid-2015. In Simandou, Rio Tinto plans staged funding
approvals with its partners for a progressive ramp up of the
operation which will become a long-life, low-cost operation
producing one of the highest grade iron ores on the market.
Timing of the ramp up is dependent on receiving necessary
approvals from the Government of Guinea and on the Government of
Guinea progressing and finalising its financing strategy.
About Rio Tinto
Rio Tinto is a leading international mining group headquartered
in the UK, combining Rio Tinto plc, a London and New York Stock
Exchange listed company, and Rio Tinto Limited, which is listed on
the Australian Securities Exchange.
Rio Tinto's business is finding, mining, and processing mineral
resources. Major products are aluminium, copper, diamonds, thermal
and metallurgical coal, uranium, gold, industrial minerals (borax,
titanium dioxide and salt) and iron ore. Activities span the world
and are strongly represented in Australia and North America with
significant businesses in Asia, Europe, Africa and South
America.
For further information, please contact:
Media Relations, EMEA / Americas Investor Relations, London
Illtud Harri Mark Shannon
Office: +44 (0) 20 7781 1152 Office: +44 (0) 20 7781
Mobile: +44 (0) 7920 503 600 1178
Christina Mills Mobile: +44 (0) 7917
Office: +44 (0) 20 7781 1154 576597
Mobile: +44 (0) 7825 275 605 David Ovington
Office: +44 (0) 20 7781
2051
Mobile: +44 (0) 7920
010 978
Media Relations, Australia / Investor Relations, Australia
Asia Dave Skinner
David Luff Office: +61 (0) 3 9283
Office: +61 (0) 3 9283 3620 3628
Mobile: +61 (0) 419 850 205 Mobile: +61 (0) 408 335
Karen Halbert 309
Office: +61 (0) 3 9283 3627 Christopher Maitland
Mobile: +61 (0) 412 119 389 Office: +61 (0) 3 9283
Bruce Tobin 3063
Office: +61 (0) 3 9283 3612 Mobile: +61 (0) 459 800
Mobile: +61 (0) 419 103 454 131
Media Relations, Canada Investor Relations, North
Bryan Tucker America
Office: +1 (0) 514 848 8151 Jason Combes
Mobile: +1 (0) 514 825 8319 Office: +1 (0) 801 204
2919
Mobile: +1 (0) 801 558
2645
Website: www.riotinto.com
Email: media.enquiries@riotinto.com enquiries.mediaaustralia@riotinto.com
Twitter: Follow @riotinto on Twitter
High resolution photographs and media pack available at:
www.riotinto.com/media
This information is provided by RNS
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END
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