Rio Tinto to go ahead with $1.9 billion bauxite project in Australia
Rio Tinto (LON:RIO), the world’s second-largest mining group, has approved a $1.9 billion bauxite project in Australia, bucking a trend among most top miners that have mostly delayed new mines to weather the effects of slumping commodity prices.
The South of Embley project, located on the Cape York Peninsula of Queensland state, will now be known as Amrun at the request of traditional owners, the Wik Way people, and will include a new mine and port, the company said in a statement.
Amrun will replace the East Weipa mine, extending Rio's Cape York bauxite operations by 40 years, which the miner expects to capitalize on as market predictions point to a substantial demand increase of the material in the next few years.
Prices for bauxite have already jumped in recent years as China's supply of the material has deteriorated, and exports from Indonesia were halted under an export ban.
Chief executive, Sam Walsh, said the project would provide 1,400 permanent jobs and 1,100 in the construction phase, set to begin in 2017.
"Amrun is one of the biggest investment projects in Queensland this year and it will continue to create opportunities for education, employment and economic growth for local businesses and communities on Cape York over coming decades," he said in a statement.
Walsh noted the mine is expected to open in 2019 and initially produce 22.8 million metric tons a year of bauxite, a raw material used in the making of alumina, which in turn is a key ingredient for aluminum production.
Bullish on copper, iron ore
Rio Tinto aluminum chief executive Alfredo Barrios said the company expects China’s annual imports of bauxite to reach 145 million tons by 2030, from around the current 45 million a year.
Depending on the market fundamentals by then, output from the Amrun mine could be increased to 50 million tons a year, Barrios said.
Queensland Resources Council chief executive, Michael Roche, welcomed the news, saying the project approval would be a “massive boost” for the state’s mining sector as it will bring A$1.5 billion into the beleaguered local economy.
The company believes that bauxite, along with copper and iron ore, are the three commodities the company is most excited about for the future, despite the short-term outlook for both the red metal and seaborne ore.