To invest $15 billion over five years; plans $2 billion investment in Madhya Pradesh and Odisha projects
Undeterred by the continued economic downslide in the West and the crisis in the Euro zone, Australian mining and iron ore giant, Rio Tinto has embarked upon an ambitious but exciting expansion and growth project with an investment of $15 billion over the next five years in areas of new mines and port facilities to respond to the demand from emerging markets like China and India.
The main aim of the programme is to respond to the growing demand from markets like China, Japan, South Korea and India. At the Parker Point port facility of the iron ore giant, there is no sign of global recession having had any impact on the operations of the company which continue unabated with an eye on stepping on the gas in the coming years.
According to the Rio Tinto media advisor, Rebecca Murphy, the company plans to invest over $15 billion in the next five years. The company has drawn up plans to expand its iron operations in the Pilbara in two major stages. The current capacity of 225 million tonnes will be increased to 283 million tonnes by 2013 and to 333 million tonnes per annum by 2015 from 20 mines. “This is an increase of more than 50 per cent of our current capacity and represents the largest integrated mining project in Australian history,” according to Ms. Murphy.
Not only this, Rio Tinto is Rio Tinto is planning investments in major water, power and fuel supply projects in the future. “We do not anticipate any kind of fall in demand from our major buyers like China, Japan and South Korea. In India, we have partnered the State government and are currently working on that project. Rio Tinto is currently exporting around 30 MT of iron ore to its customers in India,” she said.
As part of its growth plans, the company is upgrading its railway system by putting in place more automated cars trains and putting up new tracks. It is also working on plans to expanding the life of the existing mines and has already taken steps in that direction. “There has been no let up in the demand from China or other major buyers. In fact, the company is planning to step into new territory and already has a foothold in Africa. The market outlook is very favourable. We don't anticipate any change in demand from our buyers especially China.”
The Parker Point port facility witnesses arrival and departure of nearly 800 ship containers every year and Rio Tinto is embarking on plans to expand two other port facilities it has in the region. The company has a big presence in Pilbara, a land of parched grasslands, low, weathered mountains and desert in Western Australia. “The Pilbara is the closest sizeable reserve of iron ore to the rapidly expanding Chinese and Indian markets,” the company website states.
Rio Tinto's Simandou project, located in Guinea, West Africa, has significant resources of high grade iron ore. Last year, it signed a binding agreement with Chinalco's listed subsidiary Chalco, under which a joint venture to develop and operate the Simandou iron ore project would be established. Mining operations are expected to start within five years in the project.
The Odisha project, a joint venture partnership with State-owned Orissa Mining Company, is located in Eastern India. The project will focus on meeting domestic Indian demands for iron ore. Rio Tinto had recently announced plans to invest $2 billion (Rs. 10,000 crore) in iron ore and diamond mining projects in Madhya Pradesh and Odisha, one of the biggest foreign direct investments (FDIs) from Australia. Company's Chief Executive Sam Walsh (Iron Ore and Australia) had said in New Delhi that the company planned to invest $2 billion in the iron ore mining project to supply Indian and overseas clients. He said it was estimated that the company would touch a production of 15,000 million tonnes per annum in the first phase.