PERTH (miningweekly.com) – Diversified mining giant Rio Tinto said on Wednesday that it expected demand for iron-ore, aluminium and copper to double over the next 15 years, driven by industrialisation and urbanisation.
CEO Tom Albanese said in a copy of a speech delivered at the company’s annual general meeting that the group also expected a “substantial” increase in the demand for energy products.
Albanese noted that by 2030, the additional supply required would be equivalent to replicating the iron-ore output of Australia’s Pilbara region every five years, adding another aluminium production complex the size of Canada's Saguenay every nine months, and developing another copper mine the size of Escondida in Chile each year.
Future energy requirements were such that an entire coal supply chain the size of Hunter Valley, in Australia’s New South Wales, needed to be created each year, as well as a uranium mine the size of Ranger, in Northern Territory, every four years.
“These trends will require a significant response from producers,” Albanese said, adding that Rio Tinto was “well placed to benefit from what is an attractive business”.
Albanese also said that Rio Tinto would look outside Australia to grow its iron-ore production.
“Last month, for example, we decided to reinstate the concentrate expansion project to 22-million tons a year at the Iron Ore Company of Canada. While this operation has been producing mainly for the European steel industry, we are increasingly able to sell its product into the Asian market. Further expansions are possible at this business.”
He added that the completion of the proposed joint venture with Chinese steel producer Chinalco would bring momentum to the development of the Simandou iron-ore project in Guinea.
The scope of the project covers a large iron-ore mine and infrastructure to serve operations, including the construction of a 700-km railway to the coast where a deep-water port would be developed from scratch.
The group would also evaluate options to expand current capacity in the Pilbara from 220-million tons a year to 280-million tons by 2013, and to 330-million tons by 2015, but Albanese said that Australia’s tax reform had made the evaluation “more complex”.
The company was also continuing to progress the Orissa iron-ore project in India.
In the aluminium sector, Rio completed the start up of a smelter in the Middle East during 2009, to which it contributed the most advanced version of its proprietary smelting technology.
An expansion of the Yarwun refinery in Queensland would increase alumina production by two-million tons a year, starting in the second half of 2012.
Albanese noted that the company’s copper division increased its stake in the Oyu Tolgoi project, in Mongolia, through additional investment in the majority owner, Ivanhoe Mines. The investment agreement with the government of Mongolia recently came into effect, and construction work has now begun.
“We also approved $340-million of investment in the moly autoclave project at Kennecott. This will increase our overall moly recoveries,” Albanese said.
More recently, Rio completed the permitting of its Eagle nickel project in Michigan. Eagle, which was discovered by the company’s exploration team, was one of several geological prospects in a large regional land position with “great exploration potential”.
“As we continue to experience a secular uplift in demand for the commodities that Rio Tinto produces, I am proud that we have built a suite of world-class growth options for the group across a variety of commodities and geographies,” Albanese said.
He added that during that second half of last year, the company flagged that its capital budget for 2010 would be between $5-billion and $6-billion.
However, he added that over the past few months, as the company has seen the demand outlook improve significantly, it has started to approve new capital expenditure for growth projects on a case-by-case basis.
“I expect that new project approvals will continue as opportunities present themselves throughout the rest of the year,” Albanese said.