International – Mining giant Rio Tinto on Thursday revealed plans to drive costs lower at its Pilbara operations in Western Australia.
Having already demonstrated how the completion of its world-class iron ore expansion project in Western Australia will deliver significant shareholder value as the sector transitions through the ongoing volatility in global commodity markets, Rio Tinto has turned its focus on capitalising on the growing global demand for high-quality iron.
The next phase in its long-term strategy will therefore see Rio Tinto focus relentlessly on productivity and efficiency, technology, and people development.
To date, Rio Tinto has been able to reduce its Iron Ore division’s operating costs by almost $1 billion compared with the operating costs of 2012.
For the first half of 2015, Rio Tinto was able to produce iron ore at a cash costs of $16.2/t compared with $20.40/t for the same period last year.
Speaking at an investor seminar in Sydney, Rio Tinto Iron Ore chief executive Andrew Harding said the company focused on realising further costs savings through some 400 efficiency initiatives across the Pilbara.
“We have spent the past decade building the best iron ore business in the world – a project that has come in on time and below initial cost estimates – and we now intend to optimise these new assets to deliver maximum value for shareholders and stakeholders as markets transition”
Rio Tinto also revealed new detail on the data underpinning its projections for 2.5% average annual growth for steel demand across China and the rest of the world over the next 15 years. This rigorous analysis confirms that Chinese crude steel production is expected to reach around 1 billion tons by 2030. Emerging markets will also play an increasingly significant role in the iron ore market, with non-Chinese steel demand expected to increase by 65% by 2030.
“Our long-term strategy is supported by comprehensive market analysis, leadership in people, world-class technology and an unrelenting pursuit of productivity improvements. Rio Tinto has some of the best tier one mining assets in the world and our workplace culture of chasing new efficiencies will ensure we remain the best iron ore producer in the industry, said Harding.
Besides achieving productivity gains, Rio hopes to reduce maintenance costs by about $200 million a year over the next three years by using predictive analytics and enhanced maintenance planning systems.
Rio Tinto Technology and Innovation chief executive Greg Lilleyman said “Our sector-leading Mine of the Future programme is already delivering significant group-wide productivity improvements, while Rio Tinto’s first-mover status in autonomous equipment has resulted in significant productivity gains while our use of big data analytics has allowed us to safely extend maintenance cycles.”
Rio Tinto has found that autonomous trucks are 12% more productive than the manned fleet and there has been a 13% reduction in load and haul costs due to its autonomous truck efficiencies.