TIDMRIO
RNS Number : 6715R
Rio Tinto PLC
18 June 2018
Rio Tinto's iron ore business delivering value through
additional flexibility
18 June 2018
In a presentation to investors and analysts today in Perth, Rio
Tinto will showcase its Pilbara operations, a world-class,
leading-edge, fully integrated system.
The presenters will discuss how Rio Tinto's Iron Ore business
will continue to deliver superior value for shareholders by
developing greater flexibility across its system of mines, rail and
ports in Western Australia, capable of dynamically responding to
changes in market and customer demand.
Rio Tinto Iron Ore chief executive Chris Salisbury said "Our
strategy is to optimise our Pilbara assets to deliver value for our
shareholders. Our Iron Ore business delivered $7.3 billion of free
cash flow in 2017 and we will continue to maximise free cash flow
by pursuing a value-over-volume approach, built on a portfolio of
world-class assets that deliver our premium iron ore product, the
Pilbara Blend.
"We are driving productivity improvements right across the
business and we continue to leverage considerable value from
innovation and new technology. Our pioneering autonomous rail
project, AutoHaul(R), is on schedule to be implemented by the end
of the year, and is already delivering benefits to the business
through an uplift in rail capacity.
"Removing our bottleneck in rail and increasing flexibility
remain a key priority. This work is progressing well and rail and
mine capacity should be in line with nameplate port capacity by the
end of 2019. As we have said before, we will continue to optimise
the system to provide the flexibility to respond to market
conditions. However, importantly, capacity is not the same as
tonnes shipped. How we use the capacity of our integrated system
will be dynamic, in line with a strict value-over-volume
approach.
"We have an extensive pipeline of future development options,
which we continue to grow. In 2018, our 700 kilometre drilling
programme will provide both ongoing reserve replenishment and
significant optionality to optimise operations."
More than 4,500 mine-to-market productivity initiatives are
being pursued in Iron Ore, delivering $500 million in additional
free cash flow per year by 2021 as part of an annual Group-wide
target of $1.5 billion. The company's productivity and cash focus
are increasingly important to offset early signs of cost inflation
which are returning to the industry.
The Group's sector-leading application of new technology will
also be discussed, including the continued successful roll out of
automation, with 95 autonomous trucks and 11 autonomous drills
already in operation. Work is progressing on the feasibility study
for the Koodaideri project, designed to be the first mine to take
full advantage of all these innovations.
Mr Salisbury added the company continues to benefit from changes
in the Chinese steel industry.
"The steel industry in China has undergone a significant shift
in recent times due to supply-side reforms and environmental policy
improvements. We believe these reforms are structural and that our
business is well positioned to take advantage of these changes due
to robust demand for our high quality products, including the
Pilbara Blend."
Other key points from the presentations include:
Resource and mine development
-- A large drilling programme for 2018 is scheduled, with 700
kilometres of drilling scheduled at various operational hubs near
existing mines in addition to exploration on new leases.
-- The Koodaideri feasibility study continues to progress. The
project underpins the Pilbara Blend product and should be a
low-cost operation with significant capacity optionality.
-- Expected spending of $2.2 billion on replacement mines over
the next three years including initial spending on the Koodaideri,
West Angelas and Robe Valley developments.
-- The $118 million Billiard South sustaining project is in
development, helping to support Yandicoogina operations. Production
is expected to commence in 2019.
Operations
-- The Silvergrass mine continues to ramp up to its 21Mtpa
capacity, running at an annualised rate of 15.3Mtpa at end of the
first quarter of 2018.
-- Sustaining capital spending of $1 billion per year for the next three years in the Pilbara.
-- The pioneering AutoHaul(R) project is building future system
flexibility. Following regulatory approval received in May, full
implementation of the autonomous programme is anticipated by the
end of 2018.
-- Rail and mine capacity is expected to match nameplate port capacity by the end of 2019.
-- The rail productivity programme, targeting every part of the
rail system, will deliver additional capacity and flexibility to
underpin our optimised supply chain design.
Sales and marketing
-- China's steel industry is undergoing a structural change.
o Removal of less efficient steel-making capacity and strong
demand is supporting steel pricing and currently provides a robust
backdrop for high quality iron ore.
-- Shipment guidance for 2018 remains unchanged at between 330 million and 340 million tonnes.
Contacts
media.enquiries@riotinto.com
riotinto.com
Follow @RioTinto on Twitter
Media Relations, United Kingdom Media Relations, Australia
Illtud Harri Jonathan Rose
T +44 20 7781 1152 T +61 3 9283 3088
M +44 7920 503 600 M +61 447 028 913
David Outhwaite Jesse Riseborough
T +44 20 7781 1623 T +61 8 6211 6013
M +44 7787 597 493 M +61 436 653 412
Investor Relations, United Kingdom Investor Relations, Australia
John Smelt Natalie Worley
T +44 20 7781 1654 T +61 3 9283 3063
M +44 7879 642 675 M +61 409 210 462
David Ovington Rachel Storrs
T +44 20 7781 2051 T +61 3 9283 3628
M +44 7920 010 978 M +61 417 401 018
Nick Parkinson
T +44 20 7781 1552
M +44 7810 657 556
Rio Tinto plc Rio Tinto Limited
6 St James's Square Level 7, 360 Collins Street
London SW1Y 4AD Melbourne 3000
United Kingdom Australia
T +44 20 7781 2000 T +61 3 9283 3333
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END
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