Rio Tinto has approved the next stage in the development of Richards Bay Minerals in South Africa through the construction of the Zulti South project.
The US$463 million (Rio Tinto share $343 million) investment will sustain Richards Bay Minerals (RBM’s) current capacity and extend mine life.
RBM currently operates four mines in the Zulti North lease area, a mineral separation plant and smelting facility. The Zulti North ore body grade is declining, hence the Zulti South mine is required to maintain the output of high-margin zircon and rutile, and provide sufficient ore to support TiO2 sales.
The Zulti South mine (Phase 1) will underpin RBM’s supply of zircon and ilmenite over the life of mine. Construction is scheduled to start in mid-2019, subject to the granting of all necessary permits, with first commercial production expected in late 2021.
The investment will be fully self-funded from RBM’s cash flows, with no additional debt or recourse to Rio Tinto. The project is expected to deliver an internal rate of return of 24% (Rio Tinto share).
Rio Tinto chief executive J-S Jacques says:
“Rio Tinto has a long history in South Africa, and today’s investment underscores our commitment for the coming decades and beyond.” “Zulti South is one of the best undeveloped minerals sand deposits in the industry, and will significantly extend RBM’s position as a world-class, first-quartile asset. The long-term fundamentals of the market remain strong, and production from Zulti South will commence in time to fill a widening supply gap, ensuring RBM’s position as a leader in the sector, and delivering strong returns to our shareholders.”