Rio Tinto OKs $338 Million to Complete Silvergrass Iron Ore Mine Expansion

By Alex MacDonald

LONDON--Mining giant Rio Tinto PLC (RIO) said Tuesday it has approved a previously flagged plan to invest $338 million to complete the development of its Silvergrass iron ore mine in the iron-rich Pilbara region of Western Australia.

The brownfield expansion will add another 10 million tons of additional production capacity to the high-grade mine, resulting in a pay back of the original investment in less than three years and a return on investment of more than 100%.

The investment will lower mine operating costs by replacing road haulage with a more efficient conveyor system that links the Silvergrass operations to Rio's existing processing plant at Nammuldi, where the iron ore is mixed into a special blend.

"The additional low-phosphorus tonnes that Silvergrass delivers will sustain the long-term viability of our Pilbara blend, ensuring continued premium pricing, whilst also lowering our operating costs through infrastructure improvements," said Rio Tinto Chief Executive Jean-Sebastien Jacques, who took over as CEO last month.

Rio Tinto's shares in London were down 1.3% at 2,454.5 pence a share at 1056 GMT, while the FTSE 350 mining index was down 0.7%.

Write to Alex MacDonald at [e-mail]

(END) Dow Jones Newswires

August 02, 2016 07:22 ET (11:22 GMT)

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