Rio Tinto has announced it will invest $338 million to complete development of its existing Silvergrass iron ore mine.
“The brownfield expansion of the high-grade Silvergrass mine offers attractive returns, with an expected internal rate of return for this investment will in excess of 100 per cent and a payback of less than three years,” Rio Tinto said.
The project is key for the miner to maintain its higher grade iron ore blend, whilst also adding ten million tonnes of capacity.
“We are committed to disciplined capital allocation and the approval of the final phase of the Silvergrass development, which is one of the most value-accretive projects across the mining industry, delivers high-quality, low-cost growth that will underpin future returns to shareholders,” Rio Tinto CEO J-S Jacques said.
He reiterated the importance of the project in maintaining Rio’s Pilbara blend grades.
“The additional low-phosphorous tonnes that Silvergrass delivers will sustain the long-term viability of our Pilbara blend, ensuring continued premium pricing, whilst also lowering our operating costs through infrastructure improvements,” Jacques said.
These improvements include replacing road haulage with an overland conveyor system linking Silvergrass to its existing processing plant at Nammuldi.