Rio Tinto plans to spend $2.6 billion Koodaideri iron ore mine

November 29, 2018

Rio Tinto announced that it will invest $2.6 billion to develop the Koodaideri iron ore mine, its most technologically advanced mine in Australia’s Pilbara region.

The mine is expected to utilize autonomous equipment throughout the process, from drills to haul trucks and trains.

Jean-Sebastien Jacques, Rio chief executive, said Koodaideri would be a game-changer for Rio Tinto, as it would set a new benchmark for the industry in terms of adopting automation and using data to enhance safety and production.

“As we pursue value over volume approach, targeted high quality investments such as Koodaideri will ensure we continue to deliver value for our shareholders and Australians,” he said.

The Financial Times reported that the investment in the Koodaideri mine is part of a $7 billion pipeline of new projects approved this year in the Pilbara in Western Australia, as miners aim to sustain capacity amid competition from Brazil’s Vale.

Koodaideri will have an annual capacity of 43 Mt (47 million st) of iron ore when complete, underpinning Rio Tinto’s production of its flagship Pilbara blend iron ore product- a key ingredient in steel making.

Australian iron ore producers BHP, Fortescue and Rio have begun to reinvest in their iron ore businesses this year following the commodities crash in 2013-2014, which caused the mining sector to slash capital expenditure. The new projects are mainly replacing existing mines, which are coming to the end of their life, rather than to boost export volumes. They are also expected to boost efficiency and reduce operating costs as they introduce the latest technologies and practices.

In addition to advanced automation at the mine, Rio Tinto will also aim to increase the higher value lump component of its iron ore product to about 38 percent of production, up from 35 percent.

Rio Tinto said it expected to deliver an internal rate of return of 20 percent based on current iron ore price forecasts and capital intensity of around $60 per tonne of annual capacity at Koodaideri.


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