Rio Tinto Commits $3.4 More to Pilbara Expansion

Rio Tinto announced commitment in early February of a further $3.4 billion (Rio Tinto share $2.9 billion) to the major, ongoing expansion of its Pil-bara iron ore operations in Western Australia.

Of this total, $2.2 billion (Rio Tinto 100%) will go toward extension of the life of the Nammuldi iron ore mine. With this funding, Rio Tinto’s project to increase its production capacity in the Pilbara to 283 million mt/y is fully approved. The remaining $1.2 billion (Rio Tinto share $700 million) is for Cape Lambert port and rail early works needed for a proposed additional capacity expansion to 353 million mt/y. This expansion is in final feasibility study, with a final investment decision expected later this year.

The Nammuldi expansion project will extend existing mining below the water table, increasing the mine’s life by 14 years, at a production rate of approximately 16 million mt/y. The Cape Lambert funding follows other early works investments already under-way at the port. Plans to increase port capacity have been enhanced by further plans to replace an ageing car dumper with a new dual-car dumper, contribut-ing an additional 20 million mt/y of capacity to take Cape Lambert to 203 million mt/y of capacity in 2015.

Rio Tinto expects capital intensity of the expansion from 220 million mt/y to 353 million mt/y to be around $155/mt, on a 100% basis (Rio Tinto share around $135/mt). The works and plans remain subject to a number of joint venture and regulatory approvals, including environmental clearances, which are expected later this year.

Rio Tinto Iron Ore and Australia Chief Executive Sam Walsh said, “Today we are announcing another sig-nificant milestone in our drive toward a more than 50% increase in the size of our iron ore operations in Western Australia. The program remains on track, and we are bringing new iron ore production on stream at a time when demand from Asian markets is forecast to grow strongly, while industry supply growth remains constrained.”

Later in February, Rio Tinto announced it will invest $581 million (Rio Tinto share $478 million) to devel-op the world’s first automated long-dis-tance heavy-haul rail network to serve its operations in the Pilbara. The first driverless train will be launched in 2014, and the company’s AutoHaul automated train program is scheduled for completion a year later.

AutoHaul is being pioneered as part of the automation component of Rio Tinto’s Mine of the Future initiative, which also includes driverless trucks and autonomous drills ( E&MJ , December 2011, p. 4). Rio Tinto cur-rently runs 41 trains, comprising 148 locomotives and 9,400 iron ore cars, on its 1,500-km Pilbara rail network.

Also, in February, Rio Tinto released a BAEconomics report, commissioned by Rio Tinto, that looks into the bene-fits and costs of autonomous technolo-gy and concludes that investment in mining technology and innovation should sustain long-term competitive-ness while also providing the broader economic benefits likely to flow from a strong mining industry. The report, titled “Autonomous and Remote Operation Technologies in the Mining Industry: Benefits and Costs,” exam-ines recent technological advances and concludes that while the costs and challenges of automation in the mining sector are substantial, they are far out-weighed by the potential benefits they can deliver.

Rio Tinto Head of Innovation John McGagh said, “The BAEconomics report highlights the increasingly complex challenges being faced by the mining industry. Our industry is facing maturing ore bodies, fewer tier-one deposits, increasingly complex geographies, and labor shortages, and the report details how innovation in autonomous technolo-gies can play an important role in addressing these challenges.”

The 59-page report is available as a free download at au/wp-content/uploads/2010/01/Mining-innovation-5Feb12.pdf

As featured in Womp 2012 Vol 03 -