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Rio's now mining iron ore for US$14.30 a tonne

Citation:世紀矿业信息网 Date:2016-8-5 17:39:33

With iron ore now in a bull market, Rio Tinto’s board has approved US$338 million to complete the development of its Silvergrass project in Australia’s Pilbara. The company began mining at the site in August of 2015 and opened the initial phase of 5 million tonne capacity in Q4-2015.
The second phase, taking annual mine capacity from 5 to 10 million tonnes, is expected to come into production in Q4-2016.

Rio has kept a low profile in light of criticism of its aggressive expansion strategy, but is now openly touting the project: "The brownfield expansion of the high-grade Silvergrass mine offers attractive returns, with an expected internal rate of return for this investment well in excess of 100 per cent and a pay back of less than three years." 

Silvergrass is a satellite deposit adjacent to Rio Tinto’s Nammuldi mine.  Thanks to the latest investment, the project could be in full production of over 20 million tonnes per year by 2018 and is easily plugged into the company’s existing Pilbara infrastructure.

Rio reports that its Pilbara unit cash costs fell to US$14.30 per tonne in H1-2016 compared to US$16.20 per tonne year over year.