Rio Tinto outlines spending plans

26th Nov 2010 07:01

Demand for some metals will double over the next 15-20 years and Rio Tinto, already "very well positioned" to take advantage, is spending billions on expansion just to make sure.The company, which recently scrapped a proposed iron ore joint venture with BHP Billiton, said in a statement ahead of today's annual investor seminar that capital spending will probably be around US$13bn in the 18 months to December 2011 This year's figure is set to be close to $4bn and increase to about $11bn in 2011, with annual spend likely to remain at a comparable level over the medium term. Planned expansion at Pilbara, the largest mine project ever undertaken in Australia, will increase iron ore production by 50% over the next five years. Capacity should rise to 283 million tonnes per annum (mtpa) by 2013 and to 333 mtpa later. "With our track record of being able to deliver projects on time and on budget we are confident that it (Pilbara) will also be the lowest risk, highest return project in Australia for the foreseeable future," chief executive Tom Albanese said. The 'all-in' cost per tonne for the full scope of expansions in the Pilbara will be around US$130 on a 100% basis and around $105 per tonne for Rio's equity share. Mined copper production for 2010 is expected to be 661,000 tonnes due to variable grades across the mine lifecycle. Lower grades will continue in 2011 but rebound in 2012, Rio said.In a separate statement, the company said recent drilling work had raised Rio's mineral resource base in the Pilbara by 2bn tonnes (Bt), adding to the current 14.4 Bt of mineral resource and 2.8 Bt of ore reserves.Meanwhile, the Oyu Tolgoi copper-gold project in Mongolia remains on track, with first ore in 2012 with a five year ramp-up to full production. Rio has a 34.9% stake in mine owner Ivanhoe. "The long-term industrialisation and urbanisation story in developing countries continues apace. Over the next 15 to 20 years, this will lead to a doubling in iron ore, aluminium, and copper demand which will require a significant supply response," Albanese said. "With our large suite of low cost, large scale, expandable assets along with our core skills in operating excellence, exploration, technology and innovation, we are very well positioned, and are investing to take full advantage of these opportunities."