BHP Billiton President Iron Ore, Jimmy Wilson, today announced plans to cut unit costs at Western Australia Iron Ore (WAIO) by at least 25 per cent and the potential to increase capacity there by 65 million tonnes per year at a very low capital cost.

Mr Wilson outlined BHP Billiton’s view of the long-term supply and demand trends in the iron ore market.

“We continue to see healthy demand growth for iron ore in the mid-term as Chinese steel production is expected to increase by approximately 25 per cent to between 1.0 and 1.1 billion tonnes in the early to mid-2020s,” he said.

“Meanwhile, steel production growth in other emerging economies is outpacing China as those nations urbanise and industrialise. We expect to see a compound annual growth rate for global steel production of between 2.5 and 3.0 per cent between now and 2030.

“Unsurprisingly, high prices over the last decade created the incentives needed for new entrants to join the market and traditional producers to substantially increase supply. As a result, growth in seaborne supply is expected to exceed growth in demand over the short to medium term.

“In anticipation of this transition, we turned our focus from major supply chain investment to productivity, cost reduction and capital efficient growth more than two years ago.”

Mr Wilson highlighted the quality and footprint of the WAIO operations which consist of the four main joint ventures Mt Newman, Yandi, Mt Goldsworthy and Jimblebar.

“We have the strongest resource position in Western Australia and the quality of our ore bodies will help us sustain strong margins over the long term. We have already significantly cut the cost of production at WAIO and plan to go further,” he said.

“We expect unit cash costs¹ of less than US$20 per tonne² in the medium term, a reduction of more than 25 per cent on the average achieved in the 2014 financial year.

“Our reserves are concentrated around our four major mining hubs which will support a lower level of sustaining capital expenditure than required by our peers. With annual sustaining capex of approximately US$5 per tonne over the next five years, we aim to be the lowest cost supplier to China on an all-in cash basis.”

Mr Wilson also said BHP Billiton could add 65 million tonnes of capacity at WAIO at a capital intensity of approximately US$30 per annual tonne, taking total system capacity from 225 Mtpa to 290 Mtpa by the end of the 2017 financial year.

“The economics of further increasing our production are compelling. We completed our major supply chain investments some time ago and have since focussed on using BHP Billiton’s benchmarking systems to improve the performance of our equipment by systematically tackling the bottlenecks,” he said.

“We now expect to increase WAIO mine capacity to 275 Mtpa without the need for additional fixed plant investment. Beyond that, the Inner Harbour Debottlenecking and Jimblebar Phase 2 projects³ will help us to reach 290 Mtpa of supply chain capacity at low capital cost.”

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Japanese Prime Minister Shinzo Abe and Australian Prime Minister Tony Abbott highlighted the strong relationship between the two nations during a visit to Rio Tinto’s world-class iron ore operations in Western Australia.

Rio Tinto chief executive Sam Walsh and Iron Ore chief executive Andrew Harding hosted the prime ministerial delegation, showcasing the operations and employees of the West Angelas mine in the Pilbara. Mr Roy Tommy, a respected elder from the local indigenous Yinhawangka People and a Rio Tinto employee, led a Welcome to Country for the delegation.

Mr Abe and Mr Abbott inspected Rio Tinto’s world-leading next-generation technology mining equipment, including an autonomous haul truck and drill which form part of the Mine of the Future programme.

The Pilbara tour formed part of Mr Abe’s four-day bilateral visit to Australia – the first by a Japanese Prime Minister since 2002 – and follows an invitation from Mr Walsh to visit Rio Tinto’s iron ore operations after a discussion in Tokyo last year about the long-standing ties between Rio Tinto and Japan.

Mr Walsh said “It is a great honour to have Prime Minister Abe and Prime Minister Abbott visit our operations in the Pilbara and to see first-hand the very best mining technology and our talented people, who are the backbone of our iron ore operations.

“Our iron ore business was born on the back of Japanese investment and we will never, ever forget this support. Japan is now one of Rio Tinto’s most important trading partners and our enduring relationship for almost half a century symbolises the strengthening economic and trade ties between Australia and Japan.

“Under our Mine of the Future programme we operate the most sophisticated mining technology in the world, with state-of-the-art equipment from Japan at the core.”

Mr Harding said “This visit builds on nearly 50 years of successful and long standing partnerships between Rio Tinto and our Japanese joint venture partners, suppliers, customers and friends. We are intent on continuing to build these relationships through our technology partnerships to deliver mutual benefits.

“We were pleased to show some of the equipment to Mr Abe and Mr Abbott and demonstrate why we are world leaders in mining technology and show how our highly skilled employees keep us at the forefront of production, technology and safety.”

In the Pilbara, Rio Tinto operates 15 mines, a 1600km rail network, four port terminals and two power stations, which are integrated through an operations centre in Perth, more than 1500km away.

Rio Tinto’s operations in Western Australia have reached a run rate of 290 million tonnes a year, with a low-cost expansion pathway in place to expand this to 360 million tonnes a year.

The West Angelas mine, south-east of Cape Lambert, is an open-pit mine with fly-in, fly-out employees. It is part of a joint venture between Rio Tinto (53 per cent), Mitsui (33 per cent), Nippon Steel & Sumitomo Metal Corporation (14 per cent). The mine produced 29 million tonnes of ore in 2013.

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BHP Billiton today celebrated the shipment of its one billionth tonne of iron ore to Japan with customers, joint venture participants and employees in Port Hedland, Western Australia.

BHP Billiton President Iron Ore Jimmy Wilson and BHP Billiton President HSE, Marketing and Technology Mike Henry were joined by joint venture participants ITOCHU Corporation (ITOCHU) and Mitsui & Co., Ltd (Mitsui) to mark the milestone in front of the Saiko bound for Japan.

Mr Henry acknowledged Japan’s industrial transformation and the importance of two-way trade in driving economic growth.

“In the late 1960s and through the 1970s, Japan grew to become an economic powerhouse through its expertise in steel manufacturing, heavy industry, technology and electronics,” he said.

“As Japan’s economy grew, the iron ore we exported came back to Australia as high-quality manufactured products like motor vehicles and the rolling stock and rail equipment we rely on in the resources industry.

“Today the high-quality iron ore we export from the Pilbara is an essential ingredient for Japan’s high-tech steel industry which leads the world in technology and efficiency.”

Speaking at the event in Port Hedland, Mr Wilson recognised Japan’s contribution to the development of the Pilbara.

“BHP Billiton shipped its first tonne of iron ore to Japan in 1966 and we are proud of the nation-building role we have helped play since that time,” he said.

“We also owe much to Japan for their role in growing the iron ore industry in the Pilbara. Our joint venture participants ITOCHU and Mitsui contributed capital, and as trading companies they were a key link into Japanese markets.

“Over the past decade, we have invested US$24 billion in Western Australia’s mines, rail and port infrastructure and continue to adopt new technology to ensure our operations remain world-class.

“As we enter our next phase of growth, we are continuing to improve our productivity, optimising our installed capacity and working our assets harder and smarter to deliver on our customers’ expectations.”

The opening of the Jimblebar mine earlier this year has taken Western Australia Iron Ore (WAIO) capacity to in excess of 220 million tonnes per annum (Mtpa) (100 per cent basis).

Longer term, a low-cost option to expand Jimblebar to 55 Mtpa and the broader debottlenecking of the supply chain is expected to underpin capital efficient growth in WAIO capacity to approximately 270 Mtpa (100 per cent basis).

“The good relationships we have between customers, employees, Indigenous land owners,  ITOCHU and Mitsui have been and continue to be crucial to the success of the Western Australian business,” Mr Wilson said.

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Logistics tour de force sees six allflux^® fluidised bed separators on their way from Poland to the Pilbara region of Western Australia

A new wet processing plant to be set up by mid-2015 to is set to expand a Pilbara mine’s capacity to 56 million tonnes a year. At the core of the ore beneficiation plant are six allflux^®-1500 fluidised bed separators from allmineral. The separators were manufactured, pre-assembled, and extensively tested in the Polish city of Opole before being despatched by heavy-load transport to the port of shipment in March 2014 in what proved to be a logistical tour de force.

Even before the convoy of vehicles got underway, a great deal of high-precision journey preparation work was required. The team had already begun loading up the machines around 2 pm. Giant cranes were used to manoeuvre the allflux^®-1500s packed inside their shipping crates onto the haulage vehicles. Roads and motorways then had to be completely closed to traffic so these huge machines weighing 22 tonnes each could be transported to the Polish port of shipment at Malczyce. The crates measuring 7.4 m in length, 7.4 m in width, and 3.2 m in height, were transported through the Polish night by heavy-load vehicles. Time and time again support staff and escort vehicles had to dismantle road signs and street lamps along the way. In some places there were just millimetres to spare between the machines and the roadside obstacles (bridges, toll booths, etc.).

Four hours later the convoy reached the port of Malczyce, some 140 km distant, where the crates were loaded onto an inland waterway vessel to be ferried on to the port of Hamburg. The six allflux^®-1500s are scheduled to reach their destination – Port Hedland in north-western Australia – in late May. The final 400 km to their future operating site will be covered by special haulage vehicles.

This latest shipment means that the number of allflux^® fluidised bed separators in operation in iron ore mining in Australia is now 31. Another ten machines are to be supplied to another significant iron ore project under construction in the region during the course of this year. Among major iron ore processors in Australia, allmineral’s innovative processing technology is well recognised and established. Ore from the some areas of the Pilbara region is characterised by a relatively low iron content yet allmineral technology allows it to be processed efficiently into higher grade products.

Each allflux^®-1500 fluidised bed separator has a throughput of 250 tonnes of iron ore per hour. The feed material (particle size < 1 mm) is separated in two stages based upon particle size and density. The technology used for the hydraulic classification and process control equipment is such that each machine unit is able to produce three graded products of separation. “For efficient sorting of hematite iron ore our plant and machinery has been tried and tested all over the world”« notes CEO Heribert Breuer with satisfaction. “It will now be possible to secure financially successful mining operations in the Pilbara region for many years to come allowing existing and planned mining operations in Western Australia to enjoy vigorous and sustainable growth.«

allmineral is a leading supplier of customised processing plants and equipment for the mining industry worldwide. More than 750 installations designed in Duisburg for dry and wet processing of primary and secondary raw materials are currently operating reliably and efficiently around the globe.

For more information: www.allmineral.com

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Nippon Steel & Sumitomo Metal Corporation (“NSSMC”, head office: Chiyoda-ku, Tokyo; Chairman & CEO: Shoji MUNEOKA) and Mitsui & Co., Ltd. (“Mitsui”, head office: Chiyoda-ku, Tokyo; President & CEO: Masami IIJIMA) are pleased to announce that Robe River Iron Associates (“Robe River J/V”, Rio Tinto 53%, Mitsui 33%, NSSMC 14%) has agreed to invest in the development of Deposit B (“the Deposit”) in West Angelas mine and expansion of its production capacity, owned by Robe River J/V in the Pilbara region of Western Australia.

The Deposit is expected to start production in January 2015. Upon completion, total production capacity at West Angelas, from the Deposit together with existing deposits, will be expanded from the current 29 million tons per annum (“mtpa”) to 35 mtpa (“Mine Expansion”). Mine Expansion will increase Robe River J/V nameplate capacity by 6 mtpa.

Total capital cost for Mine Expansion is estimated to be A$642 million (57.8 billion yen), of which NSSMC will invest A$90 million (8.1 billion yen) and Mitsui will invest A$212 million (19.1 billion yen), in proportion with their respective ownership interests.

Through Robe River J/V, NSSMC and Mitsui will continue their effort to enable a stable supply and procurement of iron ore for which the global demand is expected to further grow.

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Rio Tinto has achieved the significant milestone of loading the first shipment of iron ore from its expanded port, rail and mine operations in Australia. This marks the commencement of commissioning of the expansion programme, which will see overall capacity for Rio Tinto’s iron ore operations in Western Australia increase to 290 million tonnes a year.

Rio Tinto Iron Ore chief executive Andrew Harding said “The 290 project is the largest integrated mining project in Australia. The delivery of 290 ahead of its original schedule and within budget is a testament to our focus on value-driven growth of our low-cost operations.

“Given the demanding operating environment in Western Australia over the recent period, this stands as a noteworthy achievement. I pay credit to the efforts and commitment of our employees, contractors and partners in the Robe River Joint Venture for what has been a genuine team effort.

“Our focus will now be to ensure the ramp-up to full run-rate is achieved safely and efficiently. As always, we will continue to seek further productivity improvements from our fully-integrated Pilbara system, including our industry leading Mine of the Future technology programme, in order to maximise the return on our investment.”

The phase two expansion of the port, rail and power infrastructure to 360 Mt/a is underway. A number of options for mine capacity growth are under evaluation including incremental tonnes from further low-cost productivity improvements, expansion of existing mines and the potential development of new mines.

Note: The Tai Shan, a Rio Tinto Marine-chartered Cape-size class vessel, has embarked from the new Cape Lambert B wharf carrying the first shipment, a cargo of 165,000 tonnes of Pilbara Blend fines. The shipment is bound for Nippon Steel & Sumitomo Metal Corporation’s Kimitsu works in Tokyo.

About Rio Tinto

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and New York Stock Exchange listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto’s business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals (borax, titanium dioxide and salt) and iron ore. Activities span the world and are strongly represented in Australia and North America with significant businesses in Asia, Europe, Africa and South America.

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BHP Billiton today announced an extension of its long term joint venture relationship with ITOCHU Corporation (ITOCHU) and Mitsui & Co., Ltd. (Mitsui).

Under the terms of the agreement, ITOCHU and Mitsui will invest approximately US$0.8 billion and US$0.7 billion respectively in shares and loans of BHP Iron Ore (Jimblebar) Pty Ltd, representing an eight per cent and seven per cent interest in the Jimblebar mining hub and resource.  The consideration includes a share of capital costs associated with the Jimblebar Mine Expansion project incurred to date.  The transaction is subject to Australian Foreign Investment Review Board approval and other customary conditions and is expected to be completed in the September 2013 quarter.

ITOCHU and Mitsui collectively hold a 15 per cent interest in BHP Billiton’s Western Australia Iron Ore current mine, rail and port infrastructure. This investment will align interests across the Western Australia Iron Ore supply chain and drive simplicity and flexibility.

BHP Billiton President Iron Ore, Jimmy Wilson, said: “We are pleased to extend our successful, long standing joint venture relationship with ITOCHU and Mitsui. The new Jimblebar mine will have initial production capacity of 35 million tonnes per annum (100 per cent basis) with future expansion potential.  Once fully operational this will bring Western Australia Iron Ore’s supply chain capacity to 220 million tonnes per annum (100 per cent basis).”

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