Operations & financial report
Capital projects
Rio Tinto is investing heavily in future growth opportunities from the Group's broad portfolio of assets. Major projects completed in 2007, together with ongoing projects are summarised below.
Project |
Estimated
cost (100% basis) |
Status/Milestones |
|---|---|---|
| Completed in 2007 | ||
| Iron ore - Expansion of Hamersley's (Rio Tinto share 100%) Mount Tom Price mine to 28 million tonnes per annum capacity. | US$226m | Project completed in March 2007. |
| Iron ore - Brownfields mine expansion of Hamersley's (Rio Tinto 100%) Yandicoogina mine from 36 million tonnes per annum to 52 million tonnes per annum. | US$530m | First ore was produced in May 2007, with the project completed at the end of the third quarter of 2007 on time and on budget. |
| Iron ore - Expansion of Hamersley's (Rio Tinto 100%) Dampier port (Phase B) from 116 million tonnes per annum to 140 million tonnes per annum capacity and additional rolling stock and infrastructure. | US$803m | This project was completed at the end of 2007 on schedule and on budget. |
| Iron ore - Hope Downs development (Rio Tinto share: 50% of mine and 100% of infrastructure). Construction of 22 million tonnes per annum mine and related infrastructure. | US$980m | First production occurred in November 2007, three months ahead of schedule. The first train load took place in December 2007. |
| Ongoing | ||
| Copper - Kennecott Utah Copper (Rio Tinto 100%) East 1 pushback. The project extends the life of the open pit to 2017 while retaining options for further underground or open pit mining thereafter. | US$170m | The project was approved in February 2005 and work on the pushback continues. The pebble crushing unit was commissioned in the third quarter of 2006. |
| Titanium dioxide - Construction by QMM (Rio Tinto 80%) of a greenfield ilmenite operation in Madagascar and associated upgrade of processing facilities at QIT in Canada. | US$1.0bn | Construction is under way. The budget was revised in 2007. First production is expected at the end of 2008. |
| Alumina - Expansion of the Gove Alumina Refinery (Rio Tinto 100%) from 2.0 to 3.8 million tonnes per annum. | US$2.3bn | Approved in September 2004, the expansion is expected to reach full nameplate capacity by the end of 2008. |
| Aluminium - Development of the 370,000 tonne per annum greenfield Sohar smelter in Oman (Rio Tinto 20%). | US$1.7bn | Approved in February 2005, first production is expected in the third quarter of 2008. |
| Aluminium - Aluminium spent pot lining recycling plant in Quebec (Rio Tinto 100%). | US$180m | Approved in September 2006, the plant is expected to begin pot lining treatment operations in the second quarter of 2008. |
| Gold - Development of Cortez Hills (Rio Tinto 40% as at 31 December 2007; on 21 February 2008, Rio Tinto entered into an agreement to sell its interest in Cortez). | US$504m | Approved in September 2005, the project continues to focus on permitting requirements. The project is on time and on budget. |
| Uranium - Rössing (Rio Tinto 68.6%) uranium mine life extension to 2016. | US$112m | Approved in December 2005, works are on schedule and on budget to prolong the life of the mine to 2016 and beyond. The mine life extension estimate remains at US$82 million with US$30 million of sustaining capital expenditure. |
| Diamonds - Argyle (Rio Tinto 100%) development of underground mine and open pit cutback, extending the life of the mine to 2018. | US$1.5bn | Approved in December 2005, the underground development consisting of 34 km of tunnels and excavations is currently 40% complete. Construction of the major underground infrastructure will commence in February 2008. Full production from the underground mine is on schedule to be achieved by December 2010. |
| Copper - Northparkes (Rio Tinto 80%) E48 block cave project extending mine life to 2016. | US$160m | Approved in November 2006. Underground development has commenced and is on schedule for May 2009 production start. |
| Energy - Clermont (Rio Tinto 50.1%) will produce 12.2 million tonnes per annum, replacing Blair Athol. | US$750m | Approved in January 2007, first shipments are expected in the second quarter of 2010 with full capacity being reached in 2013. |
| Iron ore - Cape Lambert port expansion (Rio Tinto 53%) from 55 to 80 million tonnes per annum and additional rolling stock and infrastructure. | US$952m | Approved in January 2007, the project is forecast to be complete by the end of 2008, with progressive capacity ramp up in the first half of 2009. The estimated capital cost now includes US$92m for additional rolling stock and infrastructure. |
| Iron ore - Wharf upgrade and shiploader replacement at East Intercourse Island (Rio Tinto 100%). | US$65m | The project is in progress and is expected to be complete by May 2009. |
| Alumina - Expansion of Yarwun Alumina Refinery from 1.4 to 3.4 million tonnes per annum. | US$1.8bn | Approved in July 2007, the expansion will more than double annual production at Yarwun and is expected to come onstream by 2011. |
| Iron ore - Expansion of Hope Downs Stage 2 (Rio Tinto 50%) from 22 to 30 million tonnes per annum. | US$350m | Approved in August 2007, the expansion will be complete by early 2009. |
| Recently approved | ||
| Diamonds - Construction at Diavik (Rio Tinto 60%) of an underground mine. | US$787m | Capital investment of US$563 million was approved in November 2007 in addition to US$224 million invested in 2006-2007 for the feasibility studies and related capital projects. First production from the underground mine is expected to commence in 2009. |
| Iron ore - Mesa A development (Rio Tinto 53%): construction of a 25 million tonne per annum mine and related infrastructure. | US$901m | Approved in November 2007, the mine is forecast to be complete by 2010 with a progressive ramp up to 25 million tonnes per annum by 2011. |
| Iron ore - Brockman 4 development (Rio Tinto 100%): construction of a 22 million tonne per annum mine (Phase A) and related infrastructure. | US$1,521m | Approved in November 2007, Phase A of the project, to 22 million tonnes is forecast to be complete by 2010, with scope to expand further to 36 million tonnes per annum by 2012. |
| Coking coal - extension and expansion of Kestrel mine (Rio Tinto share 80%). | US$991m | Approved in December 2007, the investment will extend the life of the mine to 2031 and increase production to an average of 5.7mtpa. |
| Nickel - Development of Eagle nickel mine in Michigan, US. | US$300m | Approved in December 2007, this high grade nickel and copper mine is expected to commence production in late 2009, delivering 16,000 tonnes of nickel per annum over a seven year period. |
| Aluminium - Replacement of overhead cranes and upgrade of crane runways on Lines 1 and 2 at Boyne Smelters (Rio Tinto 59.4%). | US$270m | Approved in January 2008, the mobile cranes and associated runways on reduction Lines 1 and 2 will be replaced. The project is estimated to be completed by late 2010. |
| Aluminium - Replacement of Lines 1 and 2 carbon bake furnace at Boyne Smelters (Rio Tinto 59.4%). | US$347m | Approved in January 2008, the carbon baking furnace that supplies anodes to Lines 1 and 2 will be replaced. The project is estimated to be completed by mid 2011. |
Group financial results by product group
The table below summarises the Group's underlying earnings by product group for each of the three years to 2007. These are discussed in the group financial results by product group of the Annual report.
| 2007 US$m |
2006 US$m |
2005 US$m |
|
|---|---|---|---|
| Iron Ore | 2,651 | 2,251 | 1,722 |
| Energy | 484 | 706 | 730 |
| Aluminium | 1,097 | 746 | 392 |
| Copper | 3,479 | 3,538 | 1,987 |
| Diamonds and Industrial Minerals | 488 | 406 | 438 |
| Other operations | 15 | 33 | 40 |
| Other items | (526) | (241) | (186) |
| Exploration and evaluation | 20 | (84) | (124) |
| Net interest | (265) | (17) | (44) |
| Group underlying earnings | 7,443 | 7,338 | 4,955 |
| Exclusions from underlying earnings | (131) | 100 | 260 |
| Net earnings | 7,312 | 7,438 | 5,215 |