Rio Tinto wins final approval to expand Australian coal mine

Production and shipping from the mine is expected from the first half of 2019, ramping up to full output by the end of the year.

“It is quite an incredible project and it has potential for growth”, Rio Tinto’s aluminium chief executive Alfredo Barrios said.

With mining costs in the lowest quartile for bauxite mines worldwide, Rio said it planned to eventually expand production at Amrun, previously called South of Embley, to produce 50 million tonnes a year.

The Anglo-Australian mining company, already the world’s biggest supplier of bauxite into China, aims to capture a predicted surge in demand by developing its Amrun project, the biggest investment approved by the board of London-based Rio Tinto this year. It slashed its budget for major projects to roughly $5.5 billion for 2015 from more than $17 billion three years ago.

The project has been plagued by delayed approvals and environmental opposition.

Shaw and Partners analyst Peter O’Connor said the bauxite market was likely to grow from 40 million tonnes today to 140 million tonnes by 2030, and noted that Amrun will come online just as the market starts to grow strongly.

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

Yesterday Rio revealed that it is lining up project financing for the $4 billion underground expansion at Oyu Tolgoi, and will likely make a final investment decision early next year. The green light could help Rio Tinto attract buyers for the mine as it looks to sell down its coal stakes amid a sharp slump in coal prices and an uncertain outlook for coal demand as the world attempts to curb global warming. Year-to-date, the stock is some 25 percent in the red.