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Giant miner Rio Tinto (LON:RIO) continues to build its reputation as the most bullish of the major mining companies after it announced today it will spend $4.2 billion on top-tier iron ore projects.
Rio, the world’s second-largest exporter of iron ore, will invest $3.7 billion in its Western Australian iron ore operations, the miner’s most profitable business, and $501 million in its Simandou operation in Guinea.
The news of Rio’s spending in the West African asset, which will turn Guinea into the world’s third-largest iron ore producer after Australia and Brazil, came only weeks after market rumours were pointing to an Anglo-Chinese consortium ready to grab the Simandou asset.
“Today’s announcement is in line with our long-held strategy of investing in and operating long-life, low-cost, tier one assets, and consistent with our view of the economic outlook,” said Rio Tinto chief executive, Tom Albanese.
“We are mindful of short-term uncertainties, and remain fully committed to a balanced approach to investment, while maintaining a single A credit rating and a progressive dividend policy,” he added.
Other companies with major ongoing expansions in the Pilbara iron belt are BHP Billiton (LON:BLT) (NYSE:BHP) and Fortescue Metals (ASX:FMG)
3 Comments
Rss1
This seems more like an investment to put Simandu on hold, rather than build it. Half a billion doesn’t even complete the railway. The mining operations will cost 6 times that. Vale is in a similar holding pattern. Presumably they are still negotiating the 30% government cut, because work appears to have come to a grinding slowdown.
2ndOrion
Rio Tinto is Smart. They know that the world will always need steel to build things. -And that iron ore will always be needed to produce new steel. Even if the current prices of ore and steel drop even to next to nothing, the price will always rebound to a price much higher than before – after the low.
Raviksinha Ravi
I agree with you.The world will continue to need steel and for that you have to tap iron ore deposits.Today the metallurgical processes may be designed at a particular grade, and the market may be low but soon, the growing demand will force the market to rise & also force mining cos to exploit low grade ores from even different iron mineral or iron ore bearing rock.For example the process to exploit iron from BHQ/BMQ is being develped for wider use.
Ravi Sinha