World Slowdown Puts a Freeze on Rio Tinto’s Iron Ore Expansion in Brazil

Rio Tinto Corumbá operation in Brazil The collapse of commodity prices and demand has led giant Australian-UK minerals corporation Rio Tinto to announce the postponement of one of its key iron ore expansion projects, the US$ 2.15 billion Corumbá mine in the heartland of Brazil.

The proposed expansion of the mines has been put on the back burner "until market conditions improve". The project was given the go-ahead only in July, when Rio was digging deep to come up with growth projects to justify its fierce rejection of BHP Billiton's aborted takeover offer.

The expansion of Corumbá from 2 million tons a year to 12.8 million tons from the fourth quarter of 2010 was meant to be a precursor to an expansion there to 23.2 million tons a year – part of Rio Tinto's previous plans to triple total annual iron ore production to more than 600 million tons a year.

The project included building a port on the Uruguayan side of the River Plate where the barges carrying the mineral ore along the Paraná River would transship to larger vessels.

While the postponement of Corumbá is significant, it is small compared with Rio's full slash-and-burn response to last year's collapse in the commodities boom, which came at a time when Rio was loaded with debt as a result of the ill-timed acquisition of Alcan.

The group's full response is due to be announced next month with the release of the group's 2008 profit result. Rio Tinto has foreshadowed big production cuts, job losses, project deferrals and asset sales as it sets out to reduce debt to more manageable levels.

An asset that could be put up for sale is Rio Tinto's 76% interest in Hunter Valley coalminer Coal & Allied. Chinese coal group Shenhua Energy was reported by the South China Morning Post on Sunday to be one of the groups interested in taking on the Rio stake in C&A, valued by the market at US$ 5.2 billion.

Mercopress

Tags:

  • Show Comments (1)

  • falupa

    BT’s expansion
    Why is it that BT is getting the ability to expand through a merger. Rio Tinto is has had an increasing stock price. They are also one of the largest companies in Brazil. Also the comodity price for iron ores usually go up in a recession. Sounds like a sound investment to me…

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Police Seize 7 Tons of Drugs at Brazil-Paraguay Border

In two days, the Brazilian Federal Police (PF) in the state of Paraná, South ...

Australia’s Loss Is Brazil’s Gain in Beef Exports

Brazil's beef exports are forecast to rise about 5% during 2009. Higher exports should ...

Brazil Talks About Worry and Offers to Help Bolivia

Brazil’s Ministry of Foreign Relations issued this Saturday, June 4, a note about the ...

Brazil Shows Polarization Between Lula and Cardoso Parties

Brazilian historian, Robson Arrais, believes that the results of the just-finished Brazil’s 2004 elections signal ...

Lula Blames Inflation on Brazil’s High Interest Rates

Brazilian President Luiz Inácio Lula da Silva said today that his Administration wants interest ...

Brazil’s Best Tribute to Niemeyer’s Genius Would Be Offering Opportunity for All

The late Brazilian architect Oscar Niemeyer was illuminated by that which we call talent. ...

Paraní¡ Is Brazil’s Number One Chicken Producer

Paraná, state in southern Brazil, is the national leader in poultry production, representing 25% ...

Brazil’s Formula to Expropriate Rural Property for Land Reform

A new formula developed by Brazil’s Ministry of Agrarian Development (MDA) to calculate the ...

Brazilian Referendum on Firearms Ban Is Mandatory

Brazil’s Minister Carlos Madeira, acting president of the Federal Elections Court (TS), confirmed October ...