Perth, Australia — MININGREVIEW.COM — 13 January 2009 – The Rio Tinto Group – the world’s third- largest mining company – has postponed a US$2.15 billion (R21 billion) expansion of the Corumba iron ore mine in Brazil because of a decline in demand for the ingredient which is essential to make steel.
In an interview with Bloomberg News from here, London-based Rio Tinto spokesman Gervase Greene described the postponement as “a response to the severe market downturn resulting from the financial crisis. We retain the option of resuming the expansion when credible signs of a market recovery are seen,” he added.
The global recession has curbed demand for steel, prompting mills in Asia, Europe and North America to reduce purchases of raw materials. Rio is cutting 14 000 jobs worldwide and slashing US$5 billion (R49.5 billion) in spending to help reduce debt and conserve cash.
“Difficulties obtaining funding for the Corumba expansion, and falling demand for iron ore, led to the decision,” newspaper Folha de S.Paulo reported last week, citing Rio finance director Aloisio do Pinho Oliveira.
Expanding the Corumba mine would have increased output more than five-fold to 12.8 million metric tonnes a year, Rio Tinto claimed last year. It was also planning to conduct a study to expand the mine further to 23.2 million tonnes.