Rio Tinto will invest US$3.4 billion to expand its iron ore business in Australia

The world's second largest iron ore producer, Rio Tinto (RIO.AX: Quote) (RIO.L: Quotes) announced on Wednesday that it will spend US$3.4 billion to expand its iron ore business in Australia. Rio Tinto has planned to introduce Australian iron ore Stone production capacity increased by more than 50% to meet the anticipated increase in demand for Chinese steel mills.

Rio Tinto said that before the second half of 2013, the annual output of the Pilbara iron ore producing area in Western Australia will increase from the current 225 million tons to 283 million tons. This will be equivalent to about five times the current global iron ore total trade volume. one.

The company said that by the end of March this year, it is expected that its iron ore annual production capacity will reach 230 million tons. Rio Tinto's iron ore output is second only to the Brazilian mining giant Vale (VALE5.SA: Quotes).

"The plan continues as usual, and when demand in the Asian market is expected to increase substantially while industry supply growth is still limited, we are opening new iron ore production capacity," said Sam Walsh, Rio Tinto's head of iron ore operations, in a statement.

Rio Tinto said that the longer-term plan is to increase iron ore production capacity to 353 million tons by the end of 2015.

Rio Tinto will assume 2.9 billion of the $3.4 billion in new investment and the remaining 500 million will be shouldered by a few partners.

Compared to the high-grade iron ore sources in Brazil and Africa, Pilbara is closer to China, giving Rio Tinto its transportation cost and time advantage.