Rio Tinto Spends $2.1 Billion on Iron Ore Project

Iron ore prices are stagnant, with little movement in spot markets. Despite this Rio Tinto Ltd [ASX:RIO] has given joint partners the go ahead to invest $2.1 billion across two iron ore projects.

Iron ore spot marks were trading at US$69.50 on 29 September.

Meanwhile iron ore 62% fines were down 0.33% at US$68.40 in yesterday’s close. Rio Tinto’s share price also reflected iron ore prices by trading slightly lower today at AU$78.16, a decline of 0.64% at the time of writing.

Iron ore prices expected to remain quiet this week

It’s likely that iron ore spot prices will remain uneventful until China’s National Day finishes up on 5 October and Future markets will also be closed in this time.

This was evident on Monday, 1 October, when 62%, 58% and 65% fines all held steady during this trading session.

On the other hand exciting news came when Rio Tinto approved plans that it would maintain production of its high-grade iron ore products in a $2.1 billion investment at two Robe River joint ventures in Pilbara, Western Australia.

Construction is expected to start next year after approvals are met, providing an estimated 1200 jobs during this period.

These projects will have a technology focus as Rio Tinto is set to retrofit 34 of its haul trucks with Autonomous Haulage system (AHS) technology, according to Australia Mining.

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What’s to come for iron ore and Rio Tinto?

While not much can be said for the future of iron ore prices, for this week at least things appear to remain quiet. But with new developments from Rio Tinto this could all change for investors.

The Rio Tinto projects are expected to reach production by 2021, and Rio Tinto’s Iron Ore chief executive, Chris Salisbury, said the expansion at West Angelas would help keep production at the Pilbara Blend, the industry’s benchmark premium iron ore product.

The additional Robe Valley deposits will enable us to continue to provide a highly valued product to our long-term customers across Asia.

The approval of these two projects highlights the strong pipeline of development options within our portfolio as we remain focused on our value-over-volume strategy. 

Meanwhile Rio Tinto has committed US$820 million to the projects, which is set to outlay part of the company’s replacement capital guidance of around US$2.7 billion from 2018 to 2020.

Regards,

Ryan Clarkson-Ledward,
For Markets & Money

PS: Aussie investors have seen great results from iron ore investments in the past. But Markets & Money resources analyst, Jason Stevenson, argues that the biggest gains in the mining sector aren’t made with big, conservative iron ore miners. He believes that your best opportunities lie in smaller, more speculative stocks. The kind that could see massive share price moves from a single positive drill-hole result. For 10 of his favourite mining stocks on the Aussie market this year, download his free report ‘Top 10 Mining Stocks 2018’ today.


Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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