Rio Tinto to invest £2.66 bn on iron ore development

Global mining giant Rio Tinto yesterday said that it planned to invest £2.66 billion  on the development of its iron ore business in Australia and Guinea to cater to strong Chinese demand.

According to the Anglo-Australian group, the investment would cover £2.35 billion for expansion of the Pilbara iron ore operations in Western Australia and £318 million for infrastructure development at the Simandou iron ore project in Guinea.

"We are directing investment to projects that will generate the most attractive returns for shareholders and are resilient under any probable macroeconomic scenario," Rio Tinto chief executive Tom Albanese said in a statement.

According to Rio Tinto Iron Ore chief executive Sam Walsh the group continued to see positive prospects for medium- to long-term iron ore demand driven by ongoing growth in Chinese consumption.

He added the company continued to forecast that annual Chinese steel production would grow from its current level of around 700 MT to around  1 billion tonnes a year out towards 2030.

He said, the demand growth was coupled with an increasingly challenged supply response, as several high-profile competitor projects had recently been either delayed or postponed.