Rio Tinto plans to ramp up production at Western Australia iron ore business

28th Nov 2013 07:17

Rio Tinto said it will increase its mine production capacity at lower capital cost per tonne at its iron ore business in Western Australia. The FTSE 100 group expects mine production capacity will increase by more than 60m tonnes per year between 2014 and 2017 from a run base rate of 290m tonnes per annum by the end of the first half of 2014.The majority of the low-cost growth will be delivered in the next two years with mine production of more than 330m tonnes in 2015. The company plans to achieve the increase in production through expansion at existing mines and through securing further low-cost productivity. Rio said its Mine of the Future programme and the proposed development of the greenfield Silvergrass mine will help achieve its goal. To fund the expansion plans, Rio has approved $400m 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 attained at $120 to $130 a tonne, including the cost of infrastructure growth and mine capacity. "Expanding our world-class, low-cost, high-margin Pilbara operations represents the most attractive investment opportunity in the sector and is in line with my commitment to be totally focussed on only allocating capital to opportunities that will generate the best returns to shareholders," said Chief Executive Sam Walsh. "The breakthrough pathway we have identified, combining brownfield expansions and unleashing low-cost productivity gains, means we will deliver the expansion at an estimated capital cost of more than $3bn below previous expectations." Extra iron ore tonnes will come from multiple mines, including Brockman 2 and Brockman 4, Yandicoogina, Paraburdoo and West Angelas.RD