Rio Tinto to expand Corumb iron ore mine in Brazil

Strong iron ore prices and rising demand in South America and the Middle East are behind Rio Tinto‘s (RTP-N, RIO-L) latest announcement that it will invest US$2.15 billion in a major expansion of its iron ore mine in Corumb, Brazil.

The investment brings to nearly US$11 billion the total capital expenditure Rio Tinto has devoted to its iron ore business since 2003.

With the new funds, Rio Tinto will ramp up capacity at Corumb more than six-fold to 12.8 million tonnes a year from 2 million tonnes with new production slated for the fourth quarter of 2010.

A feasibility study will also be completed by the middle of next year to analyze a Phase II expansion plan that would take capacity to 23.2 million tonnes a year.

The mining giant has global plans to grow iron ore production to more than 600 million tonnes a year from the 179 million tonnes it produced last year.

Corumb produces high-quality blast-furnace lump and direct reduction products.

Rio Tinto’s chief executive Tom Albanese said the decision was a major step forward in the company’s efforts to extend its iron ore operations beyond the Pilbara region in Western Australia.

Of the US$2.11 billion expansion project, roughly US$121 million will be spent on long-lead items and a further US$42 million will finance the Phase II feasibility study.

Two new ports will be constructed together with improved infrastructure networks to link the 2,500-km, multi-national supply chain. In addition, a new long-term trans-shipping services contract will enable ocean-going vessels to be topped up before shipping to markets.