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 Corumba, Brazil.
The investment brings to nearly US$11 billion Rio’s total capital spending on its iron ore business since 2003.
With the new funds, Rio Tinto will ramp up capacity at Corumba 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 started by the middle of next year to analyze an 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.
Corumba produces high-quality blast-furnace lump and direct reduction products.
Rio Tinto 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$2.1-billion project, roughly US$121 million will be spent on long-lead items and a further US$42 million will finance the feasibility study for the expansion.
Two new ports will be built together with improved infrastructure networks to link the 2,500-km, multinational supply chain. In addition, a new long-term trans-shipping services contract will allow ocean-going vessels to be topped up before shipping to markets.
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