Rio to fortify itself with $1.1 billion investments in Australian, US mines

Mumbai: Global mining giant Rio Tinto will invest $1.1 billion to expand mines in Australia and the United States to ward off an unwanted approach from rival BHP Billiton.

While Rio would spend $793 million as its 80-per cent share of the cost to extend the Kestrel coal mine in Australia, it would invest another $300 million to develop Eagle, a high-grade nickel and copper mine in Michigan, United States.

The US mine is projected to produce 16,000 tonnes of nickel per year over seven years until 2016.

Rio is also in the final stages of negotiating a contract to develop a nickel mine at Sulawesi in Indonesia, where it expects initial production of 46,000 tonnes per year beginning 2015.

After the Alcan acquisition, Rio is looking at more toward organic growth. Rio Tinto has spent $44 billion on new projects, including its $38.1 billion acquisition of Alcan in October, so far this year.

Rio is the subject of an unsolicited $120 billion takeover proposal from rival BHP Billiton Ltd/Plc.