Rio’s 80% share of the Kestrel mine expansion is budgeted at $1.1 billion.
The expansion is expected to extend the life of the Queensland coking coal mine to 2031 and increase production to an average of 5.7 million tonnes per annum.
It is on track to be completed in the second quarter of 2013.
The company has allocated $260 million for the 6Mtpa expansion of its Hunter Valley Operations and Mount Thorley Warkworth mines in New South Wales.
Approved in July 2010, the two thermal coal expansions are expected to reach the full run rate by mid-2012.
The company will make a decision about how to progress its Mt Pleasant project in NSW by the end of the year.
In Mozambique, Rio has earmarked $184 million for the expansion of thermal coal capacity at the Bengalla project by 2.1Mt to 9.3Mtpa and $270 million for the development of the greenfield Benga coking and thermal coal mine.
Production from Benga is expected to begin in 2011, with phase one planned to ramp up to a rate of 1.6Mtpa of coking coal and 0.8Mtpa of thermal coal by the end of 2012.
“We have secured further growth options in new territories, notably the successful Riversdale acquisition which delivers both thermal and coking coal opportunities in Mozambique, one the world’s premier coal basins,” Rio Tinto chief executive Tom Albanese said.
“We believe that our high quality asset base and superior growth options together with our increased investment in technology and exploration, positions Rio Tinto advantageously over the longer term.”
Rio Tinto’s overall profit for the 2011 first half was 35% higher year on year, despite the disruptions caused by Cyclone Yasi and the floods in Queensland which slashed earnings for Rio’s energy division.
Underlying earnings for Rio’s energy group for the half year were $375 million, 39% lower than the first half of 2010.
The group benefited from an improved pricing environment, but was impacted by lower volumes and higher costs due to adverse weather conditions and exchange rate movements from a stronger Australian dollar.
The 2010 first half also included the divestment of two undeveloped coal projects in Australia which delivered a $435 million pre-tax and $229 million post-tax gain.
All four Queensland coal mines experienced major production issues during the first quarter due to weather events in late 2010 and early 2011, including severe flooding and cyclones Anthony and Yasi.
Force Majeure was declared at all four Queensland operations effective December 24, 2010.
It was lifted at Blair Athol on February18, at Kestrel on February 21, at Clermont on March 9 and at Hail Creek on May 12.
“The inclement weather conditions impacted 2011 first half production of hard coking coal and semi-soft coking coal, which were 20 per cent and 24 per cent, respectively, lower than [the] 2010 first half,” the company said.
Australian thermal coal production was 2% higher than in the 2010 first half.
Hunter Valley Operations recovered rapidly from the difficult conditions earlier in the year and set a monthly record for overburden removal during the second quarter.
In 2011, Rio Tinto’s share of Australian hard coking, semi-soft coking and thermal coal production is expected to be 8 million tonnes, 3 million tonnes and 18 million tonnes, respectively.
Demand for both thermal and coking coal was robust in 2011, the company said.
“Whilst concerns remain about Japanese demand following the earthquake, tsunami and associated Fukushima nuclear accident, the recovery has been promising with the Japanese utilities affected slowly coming back online and steel demand steadily improving,” the company said.
“Growth in demand in other Asian countries helped to offset the short-term reduced demand in Japan. In particular, continued growth in India and increasing acceptance of imported coals in conjunction with domestic coal in China, underpinned demand growth for all types of coal.”
