Rio Tinto postpones expansion of Brazil iron ore mine, set to sell stake in coal unit

Mining giant Rio Tinto has postponed it's A$3 billion expansion of its Corumba iron ore mine in Brazil, due to the global economic slowdown.

Rio Tinto's $2.15-billion expansion project was announced in July to increase the annual capacity of the mine more than times from 2 million tonnes per annum to 12.8 million tonnes, from fourth quarter of 2010. (See: Rio Tinto to invest $2.15 billion in major expansion of Corumbá iron ore mine in Brazil)

The Corumba expansion project included a processing plant, transport facilities and two new ports to link the 2,500-kilometre, multi-national supply chain, scheduled to be completed by mid 2010 and a feasibility study on further expanding the mine to produce 22 million tonnes by 2012 had been projected around mid 2009.

However, the the severe market slowdown and the credit squeeze in the aftermath of the sub prime crisis  has forced the miner to postpone the expansion of the Corumba mine and associated logistics.

The expansion programme assigned to Australia's Ausenco Ltd  was estimated to represent 6 per cent of the mine engineering firm's projected 2009 revenue and 7 per cent of its estimated 2010 revenue.

Last month Rio Tinto announced measures to reduce its debts in response to severity of the global economic downturn caused by sharp fall in commodity prices and a significantly weaker outlook.

Rio Tinto net debt is A$38.9 billion and it's financing of $38 billion to purchase Canadian aluminium producer Alcan Facility last October took a toll on the company's finances. (See: Rio Tinto's $38 billion offer for Alcan gets regulatory approval) forcing it to reduce its net debt by the end of 2009.