Rio Tinto announced on Thursday that it will develop its most technologically advanced mine yet. Indeed, the company has approved a $2.6 billion investment in the Koodaideri mine in Western Australia.
Construction is set to begin next year, with first production expected in 2021. Once complete, the iron ore mine will have an annual capacity of 43 million tonnes.
The mine is expected to underpin Rio Tinto’s production of the Pilbara Blend, its primary iron ore product.
The new production hub will incorporate a processing plant and infrastructure including a 166-kilometer rail line connecting the mine to the rest of the network.
Rio Tinto’s chief executive J-S Jacques commented on the announcement:
“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 new iron ore mine is expected to deliver an internal rate of return of 20% and capital intensity of roughly $60 per tonne of annual capacity.
In addition to the new mine infrastructure, Rio Tinto has announced the construction of an airport, mine support facilities and employee accommodation. This is to accommodate the employees working onsite of the construction and once the mine is operational. The company expected to employ over 2,000 people with 600 permanent roles created once the mine begins to operate.
At the end of September, Rio Tinto announced a new share buy-back programme. Equally, earlier in July, we reported that the company was ahead of targets for iron ore exports.
At 08:41 GMT today, shares in Rio Tinto plc (LON:RIO) were trading at +1.44%.