Rio Tinto planning Australia’s largest iron ore mine

Rio Tinto planning Australia’s largest iron ore mine

BHP Billiton's  Mt Whaleback mine is currently Australia's biggest iron ore mine.

Mining giant Rio Tinto (ASX, LON:RIO) is said to be fine-tuning details to begin building a new massive pit at its Yandicoogina operation in Australia’s iron ore-rich Pilbara region.

The 70 million tonne-a-year project is meant to replace other Yandicoogina’s areas that are running out of ore, The West Australian reports.

Environmental approval documents released this week by Rio suggest the new pit, known as Pocket and Billiard South, would be about 7.5km long and nearly a kilometre wide. Most importantly, it would become Australia’s biggest iron ore mine, a title currently hold by BHP Billiton's (ASX:BHP) Mt Whaleback mine, the paper adds.

The miner has slated production at the new pit to kick off in 2017, at an initial rate of 28 million tonnes a year.

Rio first revealed plans for the $3.4 billion expansion two years ago, with $2.2 billion going towards extending the life of Nammuldi iron ore mine and $1.2 billion used on works to expand the company's Cape Lambert port and rail facilities.

The mining giant will now focus on the second phase of its expansion, which will increase iron ore production to 360 million tonnes per annum by the end of 2015.

Still betting on China

Waning Chinese demand coupled with an ever increasing worldwide glut of the steel-making material saw iron ore tumble to $89 a metric ton last month, the lowest since September 2012.

However, Rio’s chief executive Sam Walsh remains confident about the long-term prospects for the commodity. On Wednesday he told AAP that while a short-term oversupply was still weighing on price, Chinese demand for the steel-making ingredient remains strong.

He added the Asian economy was achieving its expected growth rates, and that roughly 85 million tonnes of iron ore produced in China had been displaced since the start of the year as a consequence of weak prices.