Rio pushes ahead with $3.1bn iron ore expansion

Resources giant Rio Tinto announced that it was pushing ahead with a USD 3.1 billion iron ore expansion in the wake of the BHP Billiton joint venture collapse. Rio Tinto’s share of the USD 3.1 billion is USD 2.1 billion and will be spent on expanding its iron ore infrastructure in the Pilbara to increase annual infrastructure capacity to 283 million tonnes during 2013.

Rio Tinto said in a statement that Further investments will be required to achieve production of 283 Mt/a, such as mine and housing expansions, and approval of these is anticipated within the next 12 months.

Rio Tinto has also approved a final feasibility study into increasing Pilbara production capacity by more than 50 percent to 333 Mt/a. Since July 2010, Rio Tinto has announced US$6.0 billion – of which US$3.9 billion is Rio Tinto’s share – of new investment in its Pilbara operations with the majority being spent on expansion projects.

Mr Sam Walsh said that “This is the largest mining project ever undertaken in Australia and highlights the quality of our growth options.”

Rio Tinto’s proposed joint venture with BHP Billiton would have encompassed all current and future Western Australia iron ore assets and liabilities. Owned equally by the miners, the iron ore joint venture was seen as creating synergies in excess of $10 billion.But the miners called off their plans after being advised that the proposal as it stood would not be approved by the European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission or the German Federal Cartel Office.

The miners said in a joint statement earlier this week that “Some regulators have indicated they would require substantial remedies that would be unacceptable to both parties, including divestments, whereas others have indicated they would be likely to prohibit the transaction outright.”

Source: Steelguru