Rio Tinto’s Iron Ore business continues 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.
|Image source ©Rio Tinto|
Rio Tinto Iron Ore Chief Executive Chris Salisbury said that the company’s strategy is to optimise its Pilbara assets to deliver value for 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®, 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 their bottleneck in rail and increasing flexibility remain Rio Tinto’s key priority, with rail and mine capacity planned to be in line with nameplate port capacity by the end of 2019.
“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,” said Mr Salisbury.
More than 4,500 mine-to-market productivity initiatives are being pursued by Rio Tinto 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 is also a focus, 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.”
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.