08 February 2011

Rio Tinto capex of US$277 million for Phase 2 expansion at Labrador mine

From a Rio Tinto news release issued Tuesday:

“Rio Tinto has given the go-ahead to a further US$277 million investment (Rio Tinto share US$163 million) in the next phase of a project that will ultimately raise the Iron Ore Company of Canada’s (IOC) concentrate production capacity by 40 per cent to 26 million tonnes per year (Mt/a).  

This is the second phase of a three stage expansion that was announced in May 2010 with a US$400 million investment (Rio Tinto share US$235 million) to raise production capacity from 18 Mt/a to 22 Mt/a. 

Phase two of the project will increase IOC’s spiral and magnetite concentrate production capacity by an average of 1.3 Mt/a to 23.3 Mt/a from 2013.

Recent studies have highlighted an opportunity to improve time to market through
bringing forward some capital items from the third stage, resulting in higher level of
production earlier. The third stage of the planned expansion to 26 Mt/a is currently under study and a final investment decision is expected by 2012. 

Rio Tinto chief executive, Iron ore and Australia, Sam Walsh said the project was an
important development in increasing IOC’s production at a time when global demand is escalating.

“Global seaborne iron ore demand is projected to increase substantially over the next decade, and IOC’s concentrate is well placed to complement the increasing use of lower quality ore to meet that demand,” he said.

“With high iron content and very low levels of impurities, IOC’s concentrate provides
significant value to steel producers as ore grades from direct shipping mines continue to decline.” 

The project’s construction is set to start immediately to capitalise on the brief Labrador summer construction season and will be fully commissioned by the end of 2012.”

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