NEWS
Iron Ore  

Rio spending $4 billion on iron ore pipeline amid China demand

Rio Tinto Group lifted its spending on new iron ore projects in Australia to more than $4 billion with the approval of a replacement mine at a key hub, providing a further sign of the industry’s confidence in demand led by China.

London-based Rio will invest $749 million to bring the Western Turner Syncline Phase 2 project into production from 2021, according to a statement Wednesday. It will help extend the life of operations around the Tom Price mine, which began exporting in 1966.

Rival BHP Group is spending about $3 billion on its South Flank mine and Fortescue Metals Group Ltd. is investing more than $3 billion in two developments

While the new project is aimed only at replacing output that’ll be lost from aging pits, Rio will have options to boost volumes from its $2.6 billion Koodaideri development, Chris Salisbury, iron ore chief executive officer, said in a phone interview. The Western Turner project was accounted for under capital expenditure guidance outlined last month, he said.

Australia’s top miners continue to see potential to leverage low production costs and a dominant position in the seaborne trade to generate strong profits from iron ore, even as they forecast China’s steel output to reach a peak.

Demand for ore is being supported by infrastructure projects in China launched earlier in 2019 and by ongoing property development, Salisbury said. There’s also been a more limited impact from the nation’s traditional winter output curbs on steel mills intended to limit pollution, he said.

“We haven’t seen significant effects of those so far in the season,” Salisbury said. “We are pleased with the level of demand at the moment.”

Rival BHP Group is spending about $3 billion on its South Flank mine and Fortescue Metals Group Ltd. is investing more than $3 billion in two developments, including the Iron Bridge project that’ll add output of higher-quality materials. Rio last year approved the Koodaideri project and also $820 million of spending for its share of work to sustain output from the Robe River joint venture.

The latest investment by Rio highlights “the ongoing commitment toward capital required to maintain existing” volumes and product quality in Australia’s Pilbara region, RBC Capital Markets analyst Paul Hissey said in a note. Potential for an iron ore surplus from 2020 and the prospect of continued slowing in China’s economy mean RBC was cautious about the market over the medium and long term, he said.

Rio forecasts its iron ore shipments to rise as much as 5% in 2020 and expects to have capacity to hit a long-standing target for annual cargoes of 360 million tons by 2022. Iron ore accounts for about 43% of its revenue.

“Our iron ore business does continue to deliver industry leading margins,” Salisbury said. The investments are “a commitment to the importance of iron ore to the overall Rio portfolio,” he said.

Rio’s investment in the Western Turner project will add a new crusher and a 13-kilometer (8-mile) long conveyor belt, trimming the need for road haulage and helping cut the mining hub’s greenhouse gas emissions, the producer said. The plan will also protect the future of the company’s flagship Pilbara Blend iron ore product. The investment means Rio’s approved spending on new iron ore projects is more than A$6 billion ($4 billion), according to Salisbury.

Comments:

Leave a Comment:

   
   
   
 

Rio spending $4 billion on iron ore pipeline amid China demand

Rio Tinto Group (ASX: RIO) lifted its spending on new iron ore projects in Australia to more than $4 billion with the approval of a replacement mine at a key hub, providing a further sign of the industry’s confidence in demand led by China.
 

Buying iron ore is getting more like shopping on Amazon

The world’s biggest iron ore miners are looking for novel ways of satisfying their customers and protecting market share in the $150 billion global industry.
 

Vale says internal probe into tailings disaster due this month

Brazilian miner Vale will complete an internal investigation this month into a tailings dam collapse that killed more than 250 people in January, its chief executive said on Wednesday.
 

China's iron ore imports slip in November

China's iron ore imports fell by 2.4pc on the month to 90.65mn t in November, although volumes were around 8pc higher from a year earlier.
 

Indian mills eye stocks to tide over iron ore shortage

India's iron ore output is poised to post a sharp drop in the 2020-21 fiscal year starting 1 April, but it may not result in a significant spike in imports although domestic prices may increase.
 

Indian Steel Market Weekly Snapshot

Indian spot steel trades remained limited during the week-47 (16-23rd Nov'19). Participants mentioned that, inquiries were less than the average, however due to sufficient orders in hand, the producers have slightly change their offers.
Upcoming Events
Publications
 Mines & Metals

Mine & Business Today

 Scrap & Recycling

Ahangan

Our partners