PERTH (miningweekly.com) – Diversified miner Rio Tinto on Monday revealed that it will be spending some $2.2-billion over the next three years on replacement mines for its iron-ore operations in the Pilbara, including initial spending on the proposed Koodaideri, West Angelas and Robe Valley developments.
Rio’s iron-ore CEO Chris Salisbury told investors and analysts that the company’s strategy was to optimise its Pilbara assets to deliver value for shareholders.
“Our iron-ore business delivered $7.3-billion of free cash flow in 2017 and we will continue to maximise free cash flow by pursuing a value-over-volume approach, built on a portfolio of world-class assets that deliver our premium iron ore product, the Pilbara Blend.
“We are driving productivity improvements right across the business and we continue to leverage considerable value from innovation and new technology. Our pioneering autonomous rail project, AutoHaul, is on schedule to be implemented by the end of the year, and is already delivering benefits to the business through an uplift in rail capacity.”
Salisbury said that removing the bottleneck in the company’s rail operations and increasing flexibility remained a key priority for Rio.
“This work is progressing well and rail and mine capacity should be in line with nameplate port capacity by the end of 2019. As we have said before, we will continue to optimise the system to provide the flexibility to respond to market conditions. However, importantly, capacity is not the same as tonnes shipped. How we use the capacity of our integrated system will be dynamic, in line with a strict value-over-volume approach.
“We have an extensive pipeline of future development options, which we continue to grow. In 2018, our 700 km drilling programme will provide both ongoing reserve replenishment and significant optionality to optimise operations.”
The drilling programme is scheduled at various operational ups near existing mines, and is in addition to exploration on new leases, Salisbury said.
Meanwhile, the feasiblity study on the proposed 40-million-tonne-a-year Koodaideri mine continued to progress, with the project expected to be a low-cost operation with significant capacity optionality and to underpin the Pilbara Blend product.
In addition, Rio’s $118-million Billiard South sustaining project was also in development, which would support the Yandicoogina operation. Production from Billiard South is expected to start in 2019.
Meanwhile, Rio’s Silvergrass mine is continuing to ramp up to its 21-million-tonne-a-year capacity, running at an annualised rate of 15.3-million tonnes a year at the end of the first quarter.
Rio was expecting to spend around A$1-billion a year on sustaining capital at its Pilbara mines over the next three years.