Rio Tinto Group, fending off a $173 billion takeover bid from rival BHP Billiton Ltd., approved $667 million spending on its Australian iron ore operations to help expand output faster as prices rise.
A total of $518 million will be spent on development work and equipment, London-based Rio said today in a statement to the Australian stock exchange. The remaining $149 million will be spent on a study into a new mine near its Tom Price processing plant, the company said.
Rio is seeking to double output from its Western Australian iron ore operations to 320 million metric tons within five years. Prices for the steelmaking raw material have risen six straight years to a record on surging demand from China.
“It is vital that we progress plans to deliver more iron ore to market faster than before,'' Tom Albanese, Rio Tinto chief executive officer, said in the statement. “That requires the strategic early acquisition of long-lead items, leveraging off existing industry leadership to reduce time to market of future expansions.''
Source: Bloomberg
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