Pilbara rated most expensive place in the world to build a mine

From The Australian

Rio Tinto has declared Australia the world's most expensive place to build, warning the nation must slash costs to remain competitive for global investment. Rio Tinto’s chief mine builder has declared Australia the most expensive place in the world to carry out his work, and warned the nation needs to turn that around to attract global capital. Rio chief technical officer Mark Davies also declared green iron production — promoted by Fortescue executive chairman Andrew Forrest as essential to the survival of the Australian iron ore industry — uneconomic unless a hefty carbon price was applied across the globe. “It will absolutely require a carbon price, a pretty significant carbon price, and it will effectively require a global carbon price because otherwise people will cheat it,” Mr Davies said after being asked about the issue at the Melbourne Mining Club. Mr Davies, whose responsibilities include delivering the Simandou iron ore project in Africa and a string of new mines in WA’s Pilbara region, said construction productivity in Australia had deteriorated materially in the past decade. He said Rio would take some learnings from the way its Chinese partners in Simandou built the mine and try to apply them in the Pilbara. “Australia is probably one of the most expensive places in the world to build something, and certainly the Pilbara is probably the most expensive place in the world to build something,” he said on Thursday. “We need to fix productivity now.” Mr Davies said some of the responsibility rested with mining companies, citing how Rio had lifted its game at the Amrun bauxite operations on Queensland’s Cape York Peninsula. The mining giant on Thursday pulled the trigger on investing $US180m ($275.6m) to access almost 500 million tonnes of bauxite reserve at the Norman Creek section of Amrun. Mr Davies put the onus on the Albanese government and states to provide a more supportive environment for continued investment. He said electricity, labour and tax costs had to come down and singled out the fall in construction productivity. “Certainly, how long it takes us to do a drawing, how long it takes us to erect a tonne of steel has deteriorated materially. We need to fix that if we’re going to compete for global capital,” he said. Mr Davies has played a key role at Simandou and delivered the recently opened $US2bn Western Range iron ore mine – a partnership between Rio and Chinese steelmaking giant Baowu in the Pilbara – on time and on budget. It is unclear if his role will change once new Rio chief executive Simon Trott, who had been running the Pilbara iron ore mines, starts to put his stamp on the company. There is a chance he could be tapped to run iron ore. In his current role, Mr Davies is a big part of plans to spend $US13bn on new iron ore mines, plant and equipment in the over the next three years. Last month, departing Rio chief executive Jakob Stausholm said the Pilbara was a “very expensive place to do business” and observed that Rio had learned a lot about how to build major projects “faster and cheaper” from its Chinese partners in Simandou. Rio has invested $US6.2bn as its share in building Simandou in the African nation of Guinea, with Mr Davies confirming it was on track to start production before the end of the year.