WA’s big slice of Rio’s $3.5b
About 70 per cent of the $3.5 billion budget for the iron ore mine Rio Tinto has hailed as its most technologically advanced will go into WA businesses.
Phase one of the Koodaideri project, announced last week, will generate 2000 jobs during construction, which will start next year, and 600 operational jobs in 2021.
It is the last of three major Pilbara iron ore projects this year to receive a final investment decision after BHP’s $5 billion South Flank project and FMG’s $1.8 billion Eliwana mine. Koodaideri will have an annual capacity of 43 million tonnes with a 13-year mine life.
Rio has approved a $44 million pre-feasibility study for a second phase, which could expand production to 70mtpa.
Rio’s global head of projects David Joyce said the mine, about 110km from Newman, would be a game changer.
“It will set a new benchmark in terms of the industry’s adoption of automation, data analytics and machine learning, all with the aim of bolstering safety and productivity,” he said. “The project will deliver a lot of opportunities for local and Australian businesses and we expect more than $3 billion will be provided to Australian companies and at least $2.5 billion of those will certainly be opportunities to WA-based companies.”
Rio says the operation will have “70 innovations” including an automated workshop, fully integrated mine automation and a digital replica of the processing plant workers can access in real time.
The company will need to lay 166km of rail to connect to its existing network and build other infrastructure such as an airstrip.
Koodaideri was initially forecast to cost $3 billion.
Rio iron ore chief executive Chris Salisbury said inflation had been built into the new estimate.
“We have changed the scope as well,” he said. “We have added an airport, new access road, some other infrastructure, and if you actually remove those things and compare it to other projects being approved in the State, the capital intensity is similar,” he said.
“We’re satisfied we have a robust estimate and we can deliver the project for $US2.6 billion ($3.5 billion).”
Mr Salisbury said the company was on track to reach 360mtpa in its iron ore operations from the end of next year and its push for full autonomous trains was likely to be reached by the end of this year.
He said the workforce for Koodaideri would be fly-in, fly-out, and many of the 600 jobs would be based at the mine as opposed to Rio’s operations centre in Perth.
“Of course, we’ll see the balance of roles shift from conventional mining engineering to other types of data scientists, mechatronics, those sorts of things,” Mr Salisbury said. “We’re already employing those people today.”
He said Rio contributed $27 billion to the WA economy last year, the equivalent of about 12 per cent of the gross State product.
Premier Mark McGowan said the start of Koodaideri and other projects showed there was confidence in the WA economy.
“It reinforces the fact that the economy has turned a corner and we’re out of recession, our unemployment rate is coming down, our growth rate is picking up,” he said.
The Koodaideri project will use the latest technology.