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Rio Tinto share price higher on Pilbara update

James Mickleboro
Iron Ore Mining Operations

The Rio Tinto Limited (ASX: RIO) share price has been a positive performer on Wednesday.

In afternoon trade the mining giant’s shares are up 1% to $96.96.

Why is the Rio Tinto share price pushing higher?

Today’s gain appears to be down to an update on its Pilbara iron ore operation, which has offset the pullback in iron ore prices which is weighing on Fortescue Metals Group Limited (ASX: FMG) shares today.

According to the release, Rio Tinto has approved a $1 billion investment in its existing Greater Tom Price operations. This investment is being made to help sustain the production capacity of its world-class iron ore business.

The investment in the Western Turner Syncline Phase 2 (WTS2) mine will facilitate mining of existing and new deposits. It includes the construction of a new crusher as well as a 13-kilometre conveyor.

Management advised that this new conveyor system will help lower greenhouse gas emissions from the mine by 3.5% compared to road haulage. In addition to this, the business continues to assess further options to reduce emissions. These includes using renewable energy solutions at the operation.

Should it receive government approval, Rio Tinto expects construction to start in the first quarter of 2020. After which, the first ore from the crusher is expected in 2021.

The release advises that the project is expected to deliver an attractive internal rate of return with a capital intensity of about US$25 per tonne of production capacity. This investment is included in Rio Tinto’s existing guidance for Pilbara replacement capital for 2020 to 2022.

New technologies.

Rio Tinto continues to embrace new technologies. Part of its investment includes the haul truck fleet being fitted with Autonomous Haulage System (AHS) technology. This will allow autonomous haulage at WTS2 from 2021.

Management advised that the ongoing deployment of autonomous haulage at its Pilbara operations continues to deliver significant safety benefits as well as enhancing productivity and reducing costs. By the end of the year, approximately 50% of the company’s haul truck fleet will be capable of operating autonomously.

Rio Tinto’s Iron Ore chief executive, Chris Salisbury, said: “Our iron ore business continues to deliver industry-leading margins as we drive performance from our mines. This significant investment in the Greater Tom Price hub is one of a pipeline of high-quality, low-cost options that will underpin production of our flagship Pilbara Blend product well into the future.”

The post Rio Tinto share price higher on Pilbara update appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019