Rio Tinto mulls export expansion options

Rio Tinto plans to raise its Dampier and Cape Lambert export capacity by 50m tonnes per annum (tpa) to 220 m tpa in two years and to 320m tpa in the medium term, but may seek to build a new terminal. At Cape Lambert, it intends to spend $1.021bn (US$860m) on adding another reclaimer, replacing Shiploader 1 and extending the wharf to create four berths by 2009. &#8220Rio has told analysts on a site tour of its Pilbara operations that while it could opt to expand its existing ports, Dampier and Cape Lambert, the disruption to its existing rail and shipping operations would be enormous,&#8221 the Australian reported today (Wednesday, June 13). Meanwhile, ABN AMRO Equities said it saw a change in focus offshore by the giant miner. &#8220A number of strategy shifts for the iron-ore division became apparent during the iron ore presentations,&#8221 an ABN-AMRO research note said. &#8220First, Rio Tinto is pushing harder for control of the entire supply chain including shipping to help optimise its production and deliveries. &#8220Second, the continuing rapid expansions needed to maintain market share mean the company is likely to be in a state of perpetual expansion as it brings on new mines to replace the old ones. `Third, the company is pushing hard to develop a global iron-ore business rather than an Australia-centric one. &#8220The expansions in the Pilbara to 220mtpa are progressing well, with Hope Downs in particular looking to come in earlier and ramp up faster than expected. &#8220The initial announcements that 320m tpa from the Pilbara are clearly more than pipe dreams, with early work already progressing on options and a drilling budget increased to $500m over the next five years to prove up resources that can support 320m tpa production rates. &#8220Despite these expansion options, the company might only just maintain market share on current projections, hence the focus on offshore growth options in Guinea, Brazil and India.&#8221 Last Friday, Rio appears to have been effectively sidelined in BHP Billiton-Fortescue Metals case over access to the Mt Newman rail line to Port Hedland. The Australian Competition Tribunal move was made to avoid duplication.

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