JOHANNESBURG (miningweekly.com) – Diversified miner Rio Tinto plans to spend at least $5-billion on capital expenditure during 2010, with the potential for a further $1-billion for new investments.

“Following the recapitalisation of the balance sheet, we are bringing forward some of our premier growth options through a disciplined programme of investment. For 2010, we expect our capital expenditure to be at least $5-billion with potential for this to rise to $6-billion,” said CEO Tom Albanese in the company’s 2009 annual results.

Around $1,1-billion would be spent on the expansion of Rio’s Pilbara iron-ore mines and infrastructure capacity, in order to take it beyond its current 220-million ton a year capacity.

A further $0,3-billion would be spent on the expansion of the Yarwun aluminium refiner, to take it from 1,4-million tons a year, to 3,4-million tons a year. Albanese noted that work had been slowed at this project in response to market demand, and that the change in the construction schedule would result in the completion date being the fourth quarter of 2012.

The miner would also spend around $0,4-billion on the Kestrel coking coal expansion project, which was scheduled to start producing coal during 2012.

In addition to these capital projects, the group said that it would continue to fund a number of major evaluation projects in 2010. Studies would also continue into the expansion of iron-ore production capacity in the Pilbara to 330-million tons a year by 2015.

Albanese note that detailed design and engineering work of the Cape Lambert port expansion, in Australia, would be completed by the end of 2010.

Other major evaluation projects include the Simandou iron ore project, in West Africa, and the La Granja and Resolution copper projects, in Peru and North America respectively.

Albanese stated that during the year under review, the group delivered “exceptional” operational performance, either meeting or exceeding its production targets, and its rigorous cost reduction programme, which delivered $2,6-billion in savings, beating its target one year in advance.

He added that while trading conditions were tough in the first half, the second half was much improved.

“Our iron-ore business in the Pilbara consistently operated above its nameplate capacity of 220-million tons a year during the second-half of the year and set new sales and production records for the year as a whole.”

Rio also embarked on a wholesale transformation of its aluminium business, which put it back into profit in the second half of the year. Production cutbacks were maintained throughout the year with the group’s annual aluminium run rate 9% lower by the end of the year.

Progress on asset divestments has continued apace with $7,2-billion announced in 2009, of which $5,7-billion has since completed, including $1,95-billion from the sale of the majority of the Alcan Packaging businesses which was completed earlier this month.

The bulk of the programme was began two years ago, and was now complete, with total receipts of $8,8-billion received to date of the $10,3-billion of agreed sales.

“Despite the volatility of the past year, we still believe that we are experiencing a secular uplift in demand for commodities. Our long-term outlook remains strong as China, followed by India, continues to urbanise and industrialise over the next two decades,” said Albanese.

“We have emerged from the past year a leaner and more flexible business. We will maintain our rigorous focus on operational excellence in 2010, and start the year with enhanced options for value-adding growth.”

During 2009 underlying earnings of $6,2-billion and net earnings of $4,8-billion were $4-billion below and $1,1-billion above the comparable measures for 2008.