Rio Tinto $3.6b vote of confidence in Pilbara

Just weeks after Rio Tinto chief executive Tom Albanese declared iron ore to be the fastest lane in Australia’s “three-speed economy”, the resources group has approved another tranche of funding for its estimated $US21 billion program to increase iron ore exports by close to 65 per cent.

The announcement of a $US3.7 billion ($3.6 billion) investment into its Pilbara iron ore division means Rio Tinto and its Pilbara partners, which include Hancock Prospecting, are less than $US3 billion away from completing the $21 billion expansion, which has been funded in stages over recent years. Rio exported 225 million tonnes of iron ore from the Pilbara last year, but plans to increase that to 353 million tonnes by the first half of 2015.

When Rio Tinto’s $US3.7 billion was combined with its partners’ commitments, a total of $US 5.2 billion in new money was promised for the Pilbara. The bulk of the money will be spent building new berths at Rio Tinto’s Cape Lambert port, as well as duplicating rail lines, and on building a new gas-fired power station at the port.

The iron ore division delivered close to 80 per cent of Rio Tinto’s group profits last year, and Mr Albanese recently described it as the second-best business in the world behind Apple Corporation’s manufacturing of iPads. Mr Albanese said Rio Tinto wanted to direct investment towards assets that were ”resilient under any probable macro-economic scenario’”.