Rio Tinto to Expand Iron Ore Output by 3 Times

Rio Tinto announced its latest growth strategy including expansion of iron ore output by 3 times to over 600 million tonnes per year. The firm aims the integration effect with Alcan at US$ 940 million per annum, 1.5 times as much as the present, and seeks higher corporate value by reinforcement of the existent businesses such as copper. Rio Tinto plans to increase the annual dividend by 30% in 2007 from 2006 for higher returns to shareholders. The firm presents its own growth strategy to the shareholders as a counter against BHP Billiton’s acquiring offer. Rio Tinto will invest US$ 2.4 billion and expand the iron ore output in West Australia to 420 million tonnes per year, up by 200 million tonnes compared with the former goal. The firm will invest US$ 9 billion per year in 2008 and 2009 to expand its resource business such as aluminium and copper. At the same time, the firm will reduce the funds from non-core businesses at US$ 15 billion to improve the business portfolio. The firm aims to increase its cash flow by US$ 1.7 billion until 2010 by the improvement of business composition. In West Australia, Rio Tinto will start new development of Mesa A iron ore mine and Brockman iron ore mine in Rove River, announced on Monday. These mines are scheduled to start operations in 2010 with the investment at US$ 2.42 billion. Rio Tinto reviewed its iron ore output plan in West Australia up by 42 million tonnes to 262 million tonnes until 2010 compared with the former plan to increase the output to 22 million tonnes. The firm plans to start operation of Mesa A mine initially at 20 million tonnes per annum with investment at US$ 901 million and 25 million tonnes by 2011. Rio Tinto expects there exists enough deposit amount in Rove River area to keep the operation at 32 million tonnes per year for more than 10 years. Brockman 4 mine will start operation initially at 22 million tonnes per year with investment at US$ 1.521 billion and at 36 million tonnes per year in the future.