Rio Tinto OKs $1,2bn of iron-ore expansions in Canada, Australia

TORONTO （miningweekly.com） – Mining giant Rio Tinto will spend $933-million to extend the life of its Marandoo iron-ore mine, in Australia, and has also approved a $277-million expansion at its Iron Ore Company of Canada, the group announced on Tuesday.

The group – the second biggest iron-ore producer after Brazil's Vale - is looking to expand production of the raw material, used to produce steel, amid rising prices and demand.

At Marandoo, Rio will develop adjacent reserves below the water table, extending the mine life by 16 years, to 2030, at the current mining rate of 15-million tons a year.

The project is important for Rio Tinto to sustain its annual capacity rate in the Pilbara region, and will complement expansion plans already under way, group CE for iron-ore and Australia Sam Walsh said.

Rio Tinto said that it has received some of the government and regulatory approvals needed for the project, and that the rest are “progressing well and on schedule”。

Meanwhile, in Canada, Rio Tinto said it has approved the next phase of a project announced in May last year, that will eventually boost concentrate capacity at IOC by 40%, from 18-million to 26-million tons a year.

The initial expansion was to 22-million tons a year and the second phase will boost production capacity by around 1,3-million tons a year to 23,3-million tons a year by 2013, the company said.

Construction will start immediately to capitalise on the brief summer construction season in Labrador and full commissioning is expected by the end of 2012.

Rio owns 58,7% and operates IOC, while Mitsubishi Corporation holds 26,18%, and the Labrador Iron Ore Royalty Income Fund has 15,1%.

The Anglo/Australian group's share of the spending for the latest expansion phase will be $163-million.

Rio also said it is already studying the third phase of expansion to 26-million tons, and could achieve higher production earlier than planned by bringing forward some capital items from the third stage.

A final investment decision on stage three is expected by 2012.

The expansions at IOC are important for Rio Tinto amid escalating global demand for the steelmaking ingredient, Walsh said.

“Global seaborne iron-ore demand is projected to increase substantially over the next decade, and IOC’s concentrate is well placed to complement the increasing use of lower-quality ore to meet that demand,” he said.

“With high-iron content and very low levels of impurities, IOC’s concentrate provides significant value to steel producers as ore grades from direct shipping mines continue to decline.”