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Rio Tinto set to bring more iron ore into market with rush on Pilbara expansion



AUSTRALIA-CHINA-RIO TINTO


RIO Tinto plans to accelerate its Pilbara iron ore expansion program in Western Australia by spending nearly $310 million on early works and procurement.

The global mining giant said that iron ore production capacity would reach 333 million tonnes a year in the first half of 2015, six months earlier than planned.

A total of $630 million would be spent by the participants in the project, with Rio's share being $309 million, to bring forward engineering work for the port and rail infrastructure.

The mining giant began to implement its Pilbara expansion plan in 2010. The aim is to lift capacity by 50 per cent over five years in 2010.

The early port works mostly include extra accommodation, dredging, marine works and stockyard earth works and the purchase of equipment.

The rail-related funding will enable early engineering and faster procurement of long-lead items such as rail plant, Rio Tinto said.

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Studies will continue in 2011 to determine the best mine development path to meet the schedule, as will studies for supporting infrastructure such as utilities, fuel and accommodation, the company said.

Rio's chief executive for iron ore and Australia Sam Walsh said the latest spending would mean the company would bring extra iron ore to market earlier.

"The demand outlook continues to be strong with supply lagging elsewhere in the industry and we are seeing new supplies proving slower to materialise than predicted," Mr Walsh said.

"We are taking the opportunity to bring forward the next phase of our major capacity expansion to reap the benefits early and at no additional cost."

Fat Prophets wealth management managing director Chris Kimber said he recommended a buy on Rio Tinto as demand for iron ore was increasing.

Rio Tinto shares were down 13 cents at $80.08 today.

The company beat expectations with a near $US10 billion ($A9.4 billion) leap in annual earnings reported this year, due to strong prices for iron ore and copper.

Mr Kimber said Rio Tinto's long-term success would not be predicated on pricing but on controlling costs and an expansion that maintained its 25 per cent share of the global iron ore market.

BHP Billiton plans lift production to 240 million tonnes in 2013 while Fortescue hopes to reach 155 million tonnes of iron ore per annum by 2013.