Rio Tinto will invest an incremental $338 million to complete the development of the Silvergrass mine in its world-class Pilbara iron ore operations in Western Australia.
The brownfield expansion of the high-grade Silvergrass mine offers attractive returns, with an expected internal rate of return for this investment well in excess of 100 per cent and a pay back of less than three years. It is a key element in maintaining Rio Tinto’s premium Pilbara blend, and also delivers incremental tonnage and lower unit costs.
As anticipated in previous guidance, this Silvergrass investment adds 10 million tonnes of capacity.
The investment will lower mine operating costs by replacing road haulage with a more efficient conveyor system that links the Silvergrass operations to our existing processing plant at Nammuldi.
Rio Tinto chief executive J-S Jacques said “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.
“The additional low-phosphorus 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.”
This final stage of the Silvergrass development is subject to obtaining necessary approvals from the West Australian Government.