Rio Tinto Pushes Ahead with Flagship Iron Ore Mine Expansion Despite Falling Prices

Rio Tinto (LSE:RIO) (ASX:RIO) (NYSE:RIO) is forging ahead in its quest to remain the top iron ore producer as the company announced it will open a new mine expansion at its Pilbara iron ore division in Australia.

The UK-based company has obtained permission from federal regulators to build a new brownfields mine next to its existing Yandicoogina iron ore mine in the Pilbara region despite falling prices for the steel-ingredient, which have hit a five-year low.

The “Yandicoogina Pocket and Billiard South Iron Ore Mine” project is expected to last for 16 years and become an integral part of Rio’s Pilbara iron ore division, which is expected to export roughly 270 million tons in 2014. The new mine expansion will also help in providing a much-needed boost in production volumes as the company continues to grow its Pilbara exports to 360 million tons per year.

According to documents submitted to the federal government, production for Rio's mine would commence in 2017 if approved.

"The proposed action is a large-scale iron ore mining project, with an estimated operational mine life of approximately 16 years. Subject to obtaining all relevant internal and external approvals, construction for the project is scheduled to commence in 2016. Production is scheduled to commence in 2017," the company said. 

"The project is centered on substantial iron ore deposits in the Hamersley Ranges and is anticipated to make a significant contribution to Rio Tinto's iron ore exports over the next few decades.”

Prices for iron ore have fallen from $139 a ton to $77 in the last 10 months alone. Despite the declining price, Rio’s chief executive Sam Walsh remains committed to being Australia’s lowest-cost producer.

"Regardless of what the price is, we will be the last one standing.”