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Rio spending $4 bln on iron ore pipeline amid China demand



Rio Tinto Group lifted its spending on new iron ore projects in Australia to more than $4 billion with the approval of a replacement mine at a key hub, providing a further sign of the industry's confidence in demand led by China. 
 
London-based Rio will invest $749 million to bring the Western Turner Syncline Phase 2 project into production from 2021, according to a statement on November 27. It will help extend the life of operations around the Tom Price mine, which began exporting in 1966. 
 
While the new project is aimed only at replacing output that'll be lost from aging pits, Rio will have options to boost volumes from its $2.6 billion Koodaideri development, Chris Salisbury, iron ore chief executive officer, said in a phone interview. The Western Turner project was accounted for under capital expenditure guidance outlined last month, he said. 
 
Australia's top miners continue to see potential to leverage low production costs and a dominant position in the seaborne trade to generate strong profits from iron ore, even as they forecast China's steel output to reach a peak. 
 
Demand for ore is being supported by infrastructure projects in China launched earlier in 2019 and by ongoing property development, Salisbury said. There's also been a more limited impact from the nation's traditional winter output curbs on steel mills intended to limit pollution, he said. 
 
"We haven't seen significant effects of those so far in the season," Salisbury said. "We are pleased with the level of demand at the moment." 
 
Rival BHP Group is spending about $3 billion on its South Flank mine and Fortescue Metals Group Ltd. is investing more than $3 billion in two developments, including the Iron Bridge project that'll add output of higher-quality materials. Rio last year approved the Koodaideri project and also $820 million of spending for its share of work to sustain output from the Robe River joint venture. 
 
Source:sxcoal

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