PERTH (miningweekly.com) – Diversified miner Rio Tinto on Friday deferred the development of the proposed billion-dollar Silvergrass iron-ore mine, in the Pilbara, until at least the third quarter of 2015.

A final investment decision on the Silvergrass mine, which would assist Rio in achieving its aim of increasing its Pilbara output to some 360-million tonnes a year, was initially expected in the third quarter of this year.

At an investor seminar in Sydney, Rio said that despite the decision to defer the development of Silvergrass, the originally forecast production of 330-million tonnes in 2015 and 350-million tonnes by 2017, remained unchanged with the extra production coming from brownfield development, debottlenecking and improved productivity across the Pilbara mine network.

The miner used the seminar to underline its commitment to capital discipline and shareholder value, confirming it would focus only on the projects with the highest returns to drive shareholder value.

The company noted that the ramp-up to 360-million tonnes at its Pilbara operations would create the best value for Rio’s shareholders, adding that the iron-ore operations were one of the most attractive businesses in the world, not just in the mining sector, but across all industries.

Meanwhile, the miner has also promised shareholders more sustainable cash returns during the next year, as its efforts to streamline operations gathered momentum.

“Our commitment to our shareholders is to deliver sustainable cash returns to shareholders through the cycle. We will deliver this thanks to our superior portfolio of tier-one assets, an unrelenting focus on financial discipline and our unquestionable operating and commercial expertise, founded on a culture of safety and integrity,” CEO Sam Walsh said on Friday.

“The delivery of our progressive dividend is a key commitment. Looking out over the next five years, we expect to generate strong free cash flow and we remain committed to materially increase cash returns to shareholders in a sustainable way.”

Walsh said that Rio’s aim was to deliver best-in-class returns by operating in the most attractive long-term sectors with assets that enable the company to be the most competitive in the industry, complemented by a strong balance sheet.

“We are transforming our business into a more streamlined, accountable organisation by delivering on our promises. Capital expenditure is down 34% on last year, yet we expect copper equivalent growth of 5.2% a year to 2019 as we invest your dollars in only those projects with the best returns.

“While the long-term outlook remains sound, the near term is undoubtedly more challenging. However, Rio Tinto is soundly positioned to prosper against this backdrop of uncertainty because the current dynamics play to our strengths and our competitive advantages come into their own.”

COAL RESOURCE AND RESERVE HIKE

Meanwhile, the miner on Friday also announced a significant increase of its managed thermal coal reserves and resources in the Hunter Valley of New South Wales, Australia.

Ore reserves increase by 546-million tonnes, from 1.33-billion tonnes to 1.88-billion tonnes, while the total mineral resources increased by 369-million tonnes, from 2.345-billion tonnes to 2.72-billion tonnes.

Rio Tinto Coal Australia MD Chris Salisbury said that an extensive drilling programme over several decades meant that the company had high confidence in its increased understanding of its coal assets and their quality, which is characterised by shallow, thick seams with little geological faulting.

“This discovery of greater coal reserves and resources is the result of more than a year’s work and forms part of our wider efforts to deliver greater value to our shareholders. We continue to examine our asset base for further opportunities.

“Our extensive reserve and resource base, further amplified by this latest announcement, provides many options to sustain and grow our business in the Hunter Valley for many decades to come,” Salisbury said.