Rio Tinto, Japanese partners to inject $1.55B into Aussie iron ore projects
World’s second largest miner Rio Tinto (ASX, LON:RIO) and its joint venture partners, Mitsui & Co and Nippon Steel & Sumitomo Metal, approved Monday a $1.55 billion investment to sustain production capacity at two iron ore projects in Western Australia.
Rio said it would invest a total of $820 million across Robe Valley and West Angelas projects in Australia’s Pilbara region, which are part of the Robe River joint venture with the Japanese firms.
Rio, which has a 53 percent share in the JV, will wear the lion's share of the cost at $820 million.
The three partners will spend $967 million to develop the Mesa B, C and H deposits at Robe Valley and $579 million to build Deposits C and D at the existing West Angelas operation
The miner, which holds 53 per cent of the JV, said it expected to begin construction of both projects next year, once approvals have been obtained, with an estimated 1,200 jobs to be created during this phase. The projects are forecast to reach production in 2021.
Both projects will have a technology focus, with Rio Tinto planning to retrofit 34 of its haul trucks with Autonomous Haulage System (AHS) technology.
Rio Tinto’s Iron Ore chief, Chris Salisbury, said the development at West Angelas would help maintain production of the Pilbara Blend, the industry’s benchmark premium iron ore product, as well as its Robe Valley lump and fines products.
Investment would enable Rio to sustain production of its Pilbara Blend brand of iron ore and its Robe Valley lump and fines products.
The move follows similar announcements by rivals BHP (ASX, NYSE: BHP) (LON:BLT) and Fortescue Metals (ASX: FMG).
BHP has already started work on its $2.9-billion expansion of the South Flank iron ore project in Western Australia, which will give it another 25 years of further production.
And Fortescue announced in May that it was going ahead with its plans to build the $1.3 billion Eliwana mine, also in the Pilbara region.
Rio, already the world’s No. 2 iron ore producer behind Brazil’s Vale (NYSE:VALE), owns a 53 percent holding in the Robe River Joint Venture, Mitsui 33 percent and Nippon Steel & Sumitomo Metal Corporation 14 percent.
The company’s board has yet to make a decision as to whether it will approve development of the Koodaideri project in the Pilbara, which would mark a key expansion in Rio’s production volumes.