A Spokesperson for Rio Tinto has told MINING DAILY that the expansion of its Cape Lambert iron ore port facility has been completed ahead of schedule, despite the current financial situation.
“Rio Tinto finished the Cape Lambert upgrade this month, with the first shipment from the upgraded site occurring two weeks ago,” the spokesperson said.
Yesterday, a Fairfax newspaper said the mining giant had been forced to delay the multi-billion dollar expansion, in turn undermining a key plank of its takeover defence against BHP Billiton.
“The port was originally intended to be completed by the first quarter of 2009. However, it has since been completed in the fourth quarter of 2008, three months ahead of schedule and under budget,” the spokesperson said.
“The site is now running at full capacity or 220 million tonnes. Rail, mine and port are now in equilibrium, which up until this month, was not the case as port was lagging behind due to an unfinished terminal.”
According to the Fairfax newspaper report, a sharp slump in commodity prices and falling demand from Chinese steel makers, coupled with Rio Tinto’s weak balance sheet have put the 100 million tonne expansion in doubt and the final investment decision on the project has been pushed back until next year.
However, the spokesperson said the Cape Lambert project is now at a natural end.
“We are deciding on the expansion beyond 220 million tonne. We are assessing our ability to increase the capacity to 320 million tonne. We haven’t yet decided on this, but will make the decision in 2009 when we originally intended to do so,” he said.
According to an article published on www.betainvestors.com, further expansion had been considered crucial to the Australian mining corporation’s takeover defence against BHP Billiton.
However, that argument is now null and void as BHP Billiton last night abandoned its long-running $US66 billion hostile takeover for Rio Tinto.
BHP had spent 18 months on the deal and now will be forced to write off $US450 million in costs including advisory fees and fees associated with the arrangement of a $US55 billion debt facility.
BHP’s shock decision caused Rio shares to shed 37%, valuing the company at $66 billion.
BHP on the other hand, closed 7.2% higher at the end of last night’s trading.