Rio Tinto Okays $1.9 Bln Amrun Bauxite Project

Output and shipping is due to start in the first half of 2019. Mr Walsh said Rio was “establishing Cape York bauxite as the product of choice for the Chinese seaborne market…”

Rio Tinto Group, the world’s second-biggest miner, is advancing talks with potential customers in China for its new $1.9 billion bauxite project in Australia that will be built to meet growing demand in the world’s most populous nation. South of Embley bauxite expansion project in northern Queensland.

Amrun will replace the East Weipa mine, extending Rio’s Cape York bauxite operations by 40 years, which the miner expects to capitalize on as market predictions point to a substantial demand increase of the material in the next few years. “However, if you produce good quality bauxite, and Weipa is very good quality, then you remain relatively unaffected and can generate a high margin throughout the cycle”, said analysts at Barclays.

Rio has also changed the name of the mine to the Aboriginal word Amrun, a traditional indigenous name for the area.

“It is a tier-one asset that will deliver significant benefits to all our stakeholders”, said Sam Walsh, Rio Tinto’s chief executive.

Amrun was approved by federal authorities in 2013, but reduced capital spending and a redesigning of the project deferred the approval until now. “Players like BHP are down 2 per cent and Rio Tinto is not far behind” said Chris Conway, head of research and trading, Australian Stock Report.

Sceptics who have watched Rio Tinto sink billions of dollars to expand during the boom years while its share price has sunk to close to a six-year low question the wisdom of pouring money into a project now.

‘(It is the) single largest private investment that we have seen outside the southeast of our state in many, many years, ‘ Ms Palaszczuk said.

At its peak, construction of the project is expected to provide work for around 1100 people.

The underground expansion, with 25 billion pounds of copper and 12 million ounces of gold reserves, will make Oyu Tolgoi one of the world’s top 10 copper mines and propel growth for Rio outside iron ore, where most of its revenue is generated.