Rio Tinto (ASX:RIO) brings online its first greenfield iron mine in WA

Highlights

• Rio Tinto delivers first ore from the Gudai-Darri iron ore mine.
• Gudai-Darri is Rio’s first greenfield mine in Pilbara, Western Australia, in over a decade.
• RIO shares have gained almost 13% in past six months.

After over a decade’s wait, Rio Tinto (ASX:RIO) has brought online its first greenfield mine in Western Australia. Rio Tinto has delivered its first ore from the Gudai-Darri iron ore mine located in the Pilbara region. Gudai-Darri is expected to underpin the production of Rio’s flagship Pilbara Blend™ product in future.

Rio Tinto share price performance

At 11:06 AM AEST, RIO shares were trading at AU$111.530 a share, up o.432%. RIO share price has shed off around 6% in last five trading days. However, in last six months, the stock has gained over 13%. On a YTD basis, RIO shares have appreciated by around 11%. 

How can Gudai-Darri iron ore mine help Rio Tinto?

Rio Tinto claims that Gudai-Darri has an expected life of over forty years with an annual capacity of forty-three million tonnes. The production from the mine is reportedly ramping up and is expected to reach full capacity during 2023. The first autonomous AutoHaul™ trains filled with iron ore from Gudai-Darri’s process plant have travelled the rail line connecting to Rio Tinto’s existing rail and port infrastructure. A feasibility study to support the mine’s expansion is also progressing.

Rio Tinto expects the mine’s commissioning and ramp-up to increase its iron ore production volumes and improve product mix from Pilbara by the current year’s second half. However, Rio Tinto has not changed its full-year shipments guidance for 2022, being 320 to 335 million tonnes. Company has estimated the mine’s capital cost to be around AU$4.3 billion. Meanwhile, Rio Tinto’s group capital expenditure guidance for 2022 remains unchanged at around US$8 billion.

Gudai- Darri is also anticipated to support Rio Tinto’s emission reduction targets, as it will be powered by a solar farm covering around a third of the mine’s average electricity demand. The solar farm construction is expected to be completed in August. It will also have a new lithium-ion battery energy storage system and is estimated to reduce Rio Tinto’s annual carbon dioxide emissions by around 90,000 tonnes.

Management Commentary

According to Simon Trott, Chief Executive, Rio Tinto Iron Ore:

He also acknowledged the support of the Gudai-Darri mine’s traditional owners, the Banjima People who worked closely with Rio for mine development.

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