Rio Venture to Spend $733 Million on Australian Iron Ore Hub

Rio Tinto Group's West Angelas iron ore mine in Pilbara, Australia, in 2012.

(Bloomberg) -- Rio Tinto Group and partners Mitsui & Co. and Nippon Steel Corp. will spend $733 million on developing new iron ore mines in the Pilbara region of Western Australia to sustain output from the West Angelas hub.

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The West Angelas Sustaining Project will involve mining new areas to keep production at about 35 million tons of the steelmaking ingredient each year, Rio said in a statement Tuesday. The group has received all government approvals and first production should begin in 2027.

“The West Angelas hub has been an integral part of Rio Tinto Iron Ore since 2002,” Rio Tinto Iron Ore Chief Executive Officer Matthew Holcz said. “Securing these approvals ensures ongoing investment in the hub as we continue to supply high-quality, reliable iron ore to meet our global customers’ demand now and into the future.”

Rio is contending with falling ore grades and dwindling reserves across several of its current operations, driving the company to invest heavily in the region to sustain production. The company needs to build a major new mine every year for the rest of this decade to maintain output. The problem is not company-specific, with other miners in the region also battling with the problem.

In March, Rio announced it would spend $1.8 billion to expand its Brockman iron ore hub in the Pilbara region to to maintain production levels as older mines depleted. Rio’s share of the West Angelas investment will be $389 million.

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