Reuters Africa : Rio Tinto clears $200 mn funds for iron ore expansion
Source : Reuters Africa
Date : 14th July 2010
Reporting : Sonali Paul
Editing : Balazs Korany
Rio Tinto has approved $200 million in funding towards a 50 percent expansion of its iron ore operations in Western Australia, its first big project decision since Australia watered down plans for a new mining tax.
The approval clears the way for work to begin on expanding capacity at its Pilbara mines to 330 million tonnes a year by the first half of 2016, the world's second biggest iron ore miner said on Wednesday.
"While the Australian government's decision to abandon its Resource super Profits Tax in favour of the proposed minerals Resource Rent Tax was a major step forward, we remain cautious over what legislation will finally be in place," Rio Tinto iron ore chief executive Sam Walsh said in a statement.
The expansion, involving port works at Dampier and Cape Lambert, was originally expected to be complete by 2015.Rio Tinto is hoping to combine its iron ore operations in Western Australia with world no.3 iron ore miner BHP Billiton, in a $116 billion joint venture proposed last year and still awaiting regulatory approval.
Under the plan, BHP Billiton is due to pay Rio Tinto up to $5.8 billion to equalise its stake in the joint venture. The final amount will be based on how much capital each company has spent on its iron ore operations since the deal was struck.
Rio is due to release second-quarter production figures later on Wednesday, with analysts expecting a steady rise in iron ore output from Pilbara and rising production from its 30 percent-owned Escondida copper mine in Chile.
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