July 14 (Bloomberg) -- Rio Tinto Group, the world’s second- largest iron ore producer, approved $200 million in spending to start expanding its Pilbara iron ore operations in Australia by 50 percent.
The money will be used to start dredging work ahead of the development that will take annual capacity to 330 million metric tons by 2016, the London-based company said today in a statement. Rio now has capacity of 220 million tons a year.
Rio revived its expansion studies last week after Australia reduced a planned mine profit tax. The world’s third-largest mining company “remains cautious” while it awaits the final legislation, Rio’s Chief Executive Officer of Iron Ore Sam Walsh said in the statement.
Rio gained 1.9 percent to A$67.81 at 10:22 a.m. Sydney time on the Australian stock exchange. The company is scheduled to report its production for the second quarter later today.
The expansion to 330 million tons a year capacity will be completed in stages with increments to 225 million tons by the first quarter of next year, 230 million tons by the second quarter of 2012 and 280 million tons in the first half of 2014, Rio said today. Dredging of the Cape Lambert port needs government and other approvals, it said.