RIO Approves A$3.5 Million For Its Most Technologically Advanced Mine

  • Nov 30, 2018 AEDT
  • Team Kalkine
RIO Approves A$3.5 Million For Its Most Technologically Advanced Mine

On 30 November 2018, RIO Tinto (ASX: RIO)  notified to ASX of its material dealings with Rio Tinto plc shares by PDMR/KMP and both the ASX and LSE of material dealings by PDMR/KMP in Rio Tinto Limited securities. In which, the following person discharging managerial responsibility (PDMR)/ Key Management Personnel (KMP), i.e., Mr. Jakob Stausholm acquired 15,000 shares at the price of £36.6435. Following this announcement, the share price climbed up 0.519% on 30 November 2018.

On 29 November 2018, the group made an announcement regarding the approval of A$3.5 billion investment in the Koodaideri iron ore mine in Western Australia. Following this approval, the company is now planning to develop its most technologically advanced mine.

 Further, the group expects the Koodaideri iron ore mine to execute a new production hub for its iron ore business in Pilbara. The development of new production hub will be done by incorporating the processing plant and infrastructure which is going to have a 166km rail line that will link the mine to the existing network. The construction of the processing plant is scheduled in 2019, and the first production is expected in late 2021. After the construction is done, it is expected that the mine will produce with an annual capacity of 43 million tonnes (Mt) which will support the production of Rio’s main iron ore product Pilbara blend.

The company has also informed that Koodaideri Phase 1 is going to help Rio in sustaining its existing production capacity by replacing depletion elsewhere in the system. Further, it is expected that the higher-value lump component of the Pilbara Blend will increase from the current average of about 35 percent to approximately 38 percent.

As per the announcement, an internal rate of return (IRR) of 20 percent is expected from the project with capital intensity of approximately $60 per tonne of annual capacity. Considering the additional cost which will be spent on rail spur, airport, camp and road access required, the figures the company is presenting are highly competitive for a new mine.

As per Rio Tinto’s chief executive J-S Jacques, Koodaideri is a game-changer for Rio Tinto as it is going to be the most technologically advanced mine the company has ever built. And, by building this technologically advanced mine, the company will be able to set a new standard for the industry in terms of automation and data use for enhancing safety and productivity.

Rio Tinto’s chief executive also said that the project will provide various important opportunities for local companies. Moreover, during the development of the project, the company is expecting that over A$3bn will be spent with businesses that are based in Australia, with opportunities for about A$2.5bn of spending on Western Australian-based businesses.

In the process of construction, Rio Tinto is expecting to hire over two thousand people, and once the mine becomes operation, the company expects to hire for 600 permanents.

After the completion of the pre-feasibility study in the year 2016, the company has increased its productivity from 40mt to 43mt.  Further, the company has also expanded the project scope for the incorporation of important safety improvements and the development of additional infrastructure.  As per the company’s announcement, Koodaideri will be using technology which is already in use across Rio Tinto, such as autonomous trucks, trains, and drills.

In the last six months, the share price of the company decreased by 11.75 percent as on 29 November 2018. RIO’s shares traded at $73.630 with a market capitalization of circa $27.19 billion as on 30 November 2018.


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