HomeBase MetalsRio Tinto to triple capital spending next year

Rio Tinto to triple capital spending next year

Iron ore mining
in the Pilbara
London, England — MININGREVIEW.COM — 26 November 2010 – Global miner Rio Tinto is to nearly triple its capital spending to US$11 billion (R77 billion) next year, as it expands its lucrative iron ore mines and bets that strong Chinese demand will keep metal prices buoyant.

In a statement issued here the company said capex would shoot up from about US$4 billion (R28 billion) in 2010, as it sought to boost iron ore output by more than 50% over five years.

“The long-term industrialisation and urbanisation story in developing countries continues apace,” chief executive Tom Albanese said in the statement ahead of a presentation to investors. “We believe the first and best use of our strong cash flows and robust balance sheet is to invest in the excellent range of value-adding growth projects across Rio Tinto’s product portfolio.”

Rio “’ the world’s second-biggest iron ore producer “’ posted a record first-half profit in August, and about 70% of that came from iron ore sales.

At the time, Rio said it would spend at least US$6 billion (R42 billion) on projects this year and US$13 billion (R91 billion) during the 18 months to the end of next year.

Today, the Anglo-Australian group said the 18-month forecast was unchanged, but due to re-phasing, this year’s capex spending would be lower at US$4 billion (R28 billion).

The heavy capex spending next year, which Rio said would likely continue over the medium term, will help build infrastructure in the Pilbara region of western Australia, where the bulk of the group’s iron ore is mined.

Rio’s iron ore unit is its most profitable.