Rio Tinto to invest more in Pilbara iron ore expansion

Thursday, 15 Sept 2011

Rio Tinto is to invest USD 833 million (Rio Tinto share USD 706 million) in major power and fuel supply projects as part of its drive to substantially increase iron ore production capacity in Western Australia.

Rio Tinto's integrated Pilbara power and gas network will be upgraded with a USD 520 million investment and a further USD 313 million will be allocated to fuel infrastructure facilities.

The projects are needed to support annual production capacity of 283 million tonnes per annum, a milestone Rio Tinto has targeted for 2013. The fuel infrastructure project will also help support the next phase of potential expansion, to 333 million tonne per annum in 2015.

Mr Sam Walsh CEO Iron Ore and Australia said "This investment marks yet another significant step towards the expansion of iron ore production by 50 per cent in the five years to 2015, a timeline we recently brought forward by six months. These projects provide certainty in meeting our power and fuel supply requirements, both now and into the future."

Power infrastructure
A USD 520 million (Rio Tinto share USD 417 million) upgrade of the integrated power and gas network will deliver an additional 120 MW to sustain the current 230 million tonne per annum capacity and support expansion to 283 million tonne per annum. Two 40 MW open cycle gas turbines will be installed as part of a new power station near the West Angelas mine site and a 40MW open-cycle gas turbine will be built at the existing Yurralyi Maya Power Station near Dampier. The investment also provides for associated power infrastructure such as substations, gas pipelines and transformers.

Fuel facilities
The USD 313 million investment (Rio Tinto share USD 289 million) in fuel infrastructure will support the expansion programme to 283 million tonne per annum, and provide some of the capacity needed for expansion to 333 million tonne per annum. On completion, the fuel network will have a total storage capacity of 100ML, with 56ML additional capacity at Parker Point port terminal at Dampier. Two new inland distribution hubs will also be created, removing the requirement for two trains to transport fuel from Port Hedland, some 400 kilometres to the north.

Rio Tinto's schedule for expanding its integrated Pilbara operations is as follows
225 million tonne per annum - current operating capacity
230 million tonne per annum by end of Q1 2012 - Dampier port incremental (in implementation)
283 million tonne per annum by end of H2 2013 - Cape Lambert 53 million tonne per annum increment (in implementation)
333 million tonne per annum by end of H1 2015 - Cape Lambert 50 million tonne per annum increment (in feasibility study)