Rio Tinto lays out $30bn capital spending plan as firm seeks to capitalise on iron ore demand
Mining monolith Rio Tinto has said it will bring forward the construction of its $6.2bn (£4.9bn) Simandou super-mine as part of a plan to boost capital spending to $30bn (£28.3bn) over the next three years.
At the company’s investor summit held yesterday, the British-Australian multinational said the site in Guinea will start turning out iron ore in 2025, a year earlier than expected.
Rio Tinto said the mine was the largest untapped high-grade iron ore deposit in the world, with an expected total yield of around 2.8bn tonnes and will add around 5 per cent to annual global seaborne supply.
The company also said it was planning to hike annual capital spending to $10bn (£7.4bn) from 2024 to 2026.
First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualised capacity of 60m tonnes per year (27m tonnes Rio Tinto share) and the mine will initially deliver a single fines product before transitioning to a dual fines product of blast furnace and direct reduction ready ore.
The world’s second-largest miner holds a 53 per cent stake in two of four Simandou mining blocks through a joint venture with China’s Chalco Iron Ore Holdings (CIOH) and the government of Guinea, CIOH holds the rest.
The Simandou project has been the subject of prolonged delays and difficulties due to its complex ownership structure, construction challenges and political challenges.
Rio has already laid down around 400 miles of railway tracks for the mine’s operation.
The news comes as China, the world’s largest iron ore customer, launched yet another push to try and wrestle price control away from mining’s ‘big three’ of which Rio Tinto is one, along with Vale and BHP Group.
China sparked alarm in the iron ore industry last year when it created China Mineral Resources Group, a new state-backed firm designed to boost its sway over prices.
But despite its attempts to try and control the market, China has not yet been able to break the hold of the ‘big three.’
Vale chief executive Eduardo Bartolomeo responded in kind this week, telling an investor day in London: “The rule of the economics are going to drive the price, the rule meaning supply and demand; they cannot impose something on you.”
Rio Tinto settled a battle of its own recently, agreeing to a £22m SEC fraud fine after six-year legal battle.
The company’s shares opened higher two per cent in London on Wednesday.