Article by Stuart McKinnon courtesy of the West Australian.
Rio nod for $US2b project | mine to come online in 2025.
Rio Tinto iron ore boss Simon Trott says the mining giant will stagger its next phase of development in the Pilbara as it looks to shield its multibillion-dollar iron ore investments from inflationary pressures.
He made the comment after Rio and its Chinese joint venture partner Baowu agreed on Wednesday to extend an historic iron ore partnership in the region by pressing the button on their $US2 billion ($3b) Western Range project.
Western Range is one of a trio of projects Rio expects to come online between 2025 and 2027 that will help boost the company’s medium-term production capacity to 345-360 million tonnes from this year’s target of 320-335Mt.
Rio suffered cost overruns and delays in delivering its most recent clutch of replacement projects, which included the West Angelas and Western Turner Syncline Phase 2 projects completed last year and its Gudai-Darri project and Mesa A wet plant project at its Robe Valley operations this year.
The next phase of the company’s investment comes as the WA mining industry continues to face inflationary pressures across a range of inputs as well as labour shortages and supply chain disruptions.
But Mr Trott said Rio planned to bring on Hope Downs 2 and Brockman Syncline 1 projects after Western Range in a “pipeline format” that would mitigate against some of the pressures.
“From 2025 onwards, we’ll need basically a mine a year for a few years as we continue to reposition our business and drive towards our capacity targets but also it just gives us a stronger foundation on our mining side,” he said.
The 25 million tonne-a-year Western Range project will help sustain production of the company’s flagship Pilbara Blend product from its existing Paraburdoo mining hub, as the Eastern Range project depletes.
It will include a primary crusher and an 18km conveyor system linking it to the existing Paraburdoo plant.
Construction is expected to begin early next year with first production anticipated in 2025.
The construction phase will support about 1600 jobs, with the mine requiring about 800 ongoing operational roles which are expected to be filled by existing workers transitioning from other sites.
Rio’s share of the capital costs ($US1.3b) are already included in the group’s capital expenditure guidance of about $US9b$US10b for each of 2023 and 2024.
Rio and Baowu have also agreed to an iron ore sales agreement at market prices covering a total of up to 126.5Mt over about 13 years, representing Baowu’s 46 per cent interest in the anticipated 275Mt of production from Western Range.
Rio’s partnership with Baowu in the Pilbara dates back to the 2002 Bao-HI Joint Venture to develop the Eastern Range deposits in the Hamersley Ranges.
Rio has developed a social and cultural heritage management plan for Western Range in consultation with the traditional owners, the Yinhawangka People.
The project is still subject to approval by Rio shareholders and various government agencies in Australia and China.
From 2025 onwards, we’ll need basically a mine a year for a few years as we reposition our business.
