PERTH (miningweekly.com) – Mining major Rio Tinto on Thursday approved a $2.6-billion investment to develop its Koodaideri iron-ore mine, in Western Australia.
“Koodaideri is a game-changer for Rio Tinto. It will be the most technologically advanced mine we have ever built and sets a new benchmark for the industry in terms of the adoption of automation and the use of data to enhance safety and productivity,” said Rio CEO Jean-Sebastian Jacques.
Koodaideri will be Rio’s first intelligent mine, incorporating the latest in high-tech advances in the industry and using an increased level of automation and robotics. The project will produce 43-million tonnes a year by 2021, but could be expanded to yield 70-million tonnes or more at a later date.
The Phase 1 project will help sustain Rio’s existing production capacity by replacing depletion elsewhere in the system, and will increase the higher-value lump component of the Pilbara Blend from the current average of around 35% to around 38%, depending on market conditions.
The project is also expected to deliver an internal rate of return of 20% and a capital intensity of around $60/t of yearly capacity, which Rio noted was highly competitive for a new mine, considering the additional infrastructure of rail spur, airport, camp and road access required.
Koodaideri will incorporate a processing plant and infrastructure, including a 166 km rail line connecting the mine to the existing network.
“Our value-over-volume approach, targeted at high-quality investments such as Koodaideri, will ensure we continue to deliver value for our shareholders and Australians,” said Jacques.
“This further investment in our iron-ore business is also a multibillion-dollar vote of confidence in Western Australia. The project will also deliver significant opportunities for local companies and we expect more than A$3-billion will be spent with Australia-based businesses, with opportunities for about A$2.5-billion of spending for Western Australia-based businesses during its development.”
Construction of the Phase 1 project will start in 2019, with first production expected in 2021.
In addition, Rio has also approved a A$44-million prefeasibility study into the Phase 2 project, which could see Koodaideri produce 70-million tonnes a year.
A final investment decision on the Phase 2 project will be subject to study outcomes, and Rio’s value-over-volume approach.