PERTH (miningweekly.com) – Mining giant Rio Tinto has committed to a further $3.5-billion investment in its iron-ore operations in the Pilbara.

The investment would comprise a $2.2-billion investment to extend the life of the Nammuldi iron-ore mine, increasing the miner’s Pilbara production capacity to 283-million tons a year.

The Nammuldi project would extend the existing mining operation to below the water table, increasing the mine’s life by some 14 years, at a production rate of 16-million tons a year.

A further $1.2-billion would be spent on the Cape Lambert port and rail early works, needed for the proposed expansion to 353-million tons a year. Rio’s share of the Cape Lambert investment would amount to around $700-million.

The Cape Lambert funding followed other early works investments already under way, including plans to increase the capacity at the port by replacing an ageing car dumper with a new dual car dumper, contributing to an additional 20-million tons a year capacity and taking total Cape Lambert capacity to 203-million tons a year by 2015.

Rio said on Wednesday that the expansion of its Pilbara operations to 353-million ton a year was currently in the final feasibility study phase, with a final investment decision expected later this year. The miner expected the capital intensity of the expansion from 220-million tons a year to 353-million tons a year to be around the mid-$150s/t, on a 100% basis.

Rio Tinto Iron-Ore and Australia CEO Sam Walsh said that the company’s drive towards a more than 50% increase remained on track, adding that Rio Tinto was bringing new iron-ore production on stream at a time when demand from Asian markets was forecast to grow strongly, while industry supply remained constrained.

“We believe we have the best quality iron-ore expansion projects anywhere in the world. They are high-return, low-risk investments that are highly value adding for shareholders,” Walsh said.

It was expected that the 283-million-ton-a-year production capacity in the Pilbara would be reached by the second half of 2013, while the Nammuldi expansion would deliver first ore in the third quarter of 2014.

Walsh noted that there would be a transitional period until then, in which ore would be sourced from other mines to reach the 283-million-ton-a-year target.

The work on Nammuldi and the Cape Lambert port remained subject to a number of joint venture and regulatory approvals, including environmental clearances, which were expected later this year.
 

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