Rio Tinto iron ore investment

(Posted on 03/12/18)

Rio Tinto is to develop its most technologically advanced mine following the full approval of a $2.6 billion¹ (A$3.5 billion) investment in the Koodaideri iron ore mine in Western Australia.

Koodaideri will deliver a new production hub for Rio Tinto’s world-class iron ore business in the Pilbara, incorporating a processing plant and infrastructure including a 166-kilometre rail line connecting the mine to the existing network. Construction will start next year with first production expected in late 2021. Once complete, the mine will have an annual capacity of 43 million tonnes, underpinning production of the Pilbara Blend, Rio Tinto’s flagship iron ore product.

Koodaideri Phase 1 will help sustain Rio Tinto’s existing production capacity by replacing depletion elsewhere in the system. The project will increase the higher-value lump component of the Pilbara Blend, subject to market conditions, from the current average of about 35 per cent to around 38 per cent. It is expected to deliver an internal rate of return of 20 per cent² and capital intensity of around $60 per tonne of annual capacity, highly competitive for a new mine considering the additional infrastructure of rail spur, airport, camp and road access required.

The operation has been designed to utilise an increased level of automation and digitisation, helping to deliver a safer and more productive mine which is expected to be Rio Tinto’s lowest cost contributor to its industry benchmark Pilbara Blend product. Through the use of digital assets, advanced data analytics and automation, Rio Tinto expects to significantly enhance the operation and maintenance of this new mine.

Rio Tinto chief executive J-S Jacques said “Koodaideri is a game-changer for Rio Tinto. It will be the most technologically advanced mine we have ever built and sets a new benchmark for the industry in terms of the adoption of automation and the use of data to enhance safety and productivity.
“As we pursue our value over volume approach, targeted high quality investments such as Koodaideri will ensure we continue to deliver value for our shareholders and Australians. This further investment in our iron ore business is also a multi-billion dollar vote of confidence in Western Australia. The project will also deliver significant opportunities for local companies and we expect more than A$3 billion will be spent with Australian-based businesses, with opportunities for about A$2.5 billion of spending for Western Australian-based businesses during its development.”

The investment is underpinned by an ore body of high-quality Brockman ore more than 20 kilometres long and three kilometres wide. In addition to mine infrastructure, an airport, mine support facilities and accommodation for employees will be built. Throughout the construction period Rio Tinto expects to employ over 2,000 people with 600 permanent roles created once the mine is operational.

Since completion of the pre-feasibility study in 2016, additional capital has been included for productivity enhancements to increase capacity to 43 million tonnes from the 40 million tonne base case. The project scope was also broadened to incorporate significant safety improvements and the development of additional infrastructure such as an airport and site access roads. Cost inflation for labour and materials also contributed to the capital increase.

Latest News

SSAB delivers decarbonised steel to Vattenfall’s solar park project in Germany

SSAB is supplying decarbonised steel to Vattenfall for the construction of the ground-mounted solar... Read more

NGFA statement on STB’s decision to conditionally accept rail merger application

In accordance with the Surface Transportation Board’s merger rules, the Board has conditionally... Read more

EU feed production market forecast highlights continued stability

FEFAC market experts are forecasting continued stability in the EU compound feed production market for... Read more

Fertilizer Action Plan: recognition must now translate into delivery

Fertilizers Europe has acknowledged the European Commission’s Fertilizer Action Plan, which recognises... Read more

Tripartite MOU to establish direct U.S.–DRC cobalt supply chain

Entreprise Générale du Cobalt, EVelution Energy LLC and Trafigura Pte Ltd. has announced... Read more

Commissioning of Oxelösund electric arc furnace delayed due to permitting

SSAB’s conversion of the mill in Oxelösund to fossil-free production is being delayed due... Read more

YEC agreement supports decarbonisation of Rio Tinto’s Pilbara iron ore operations

Yindjibarndi Energy Corporation (YEC), one of Australia’s largest Indigenous-led renewable energy... Read more

ASA Vice President urges caution in USTR Section 301 investigation

Soybean farmers are already facing significant economic headwinds and new trade actions could add further... Read more

ADM investment to upgrade Clinton, Iowa, corn processing facility

ADM, a global leader in innovative solutions from nature, has announced a multimillion-dollar investment... Read more

JV in Bayuquan, China to strengthen global raw material supply chains

CREMER ERZKONTOR GmbH has announced the official opening of its joint venture, CREMER (Yingkou) Supply... Read more