Australia China - Beyond Tomorrow

Case Study: Mining & Energy

A two-way relationship

Rio Tinto is a leading diversified mining group with operations in more than 50 countries. Its major products include coal, iron ore, uranium, aluminium, copper, diamonds, and industrial minerals (such as borates, titanium dioxide, salt and talc). Rio Tinto is a global organisation operating under a dual-listed company structure, with parent companies in both Australia and the United Kingdom. Its relationship with China began more than 50 years ago with aluminium sales in the 1960s, and since then Rio Tinto has achieved a number of important Chinese milestones: “ 1973 – Rio Tinto became the first foreign company to supply iron ore to China when it sent a shipment from Western Australia to Shanghai Number One Steel Mill, now part of Baosteel.

“ 1987 – became the first foreign company to enter into a resources joint venture with a Chinese company when it established the Channar iron ore project with Sinosteel in Western Australia. This project has since shipped almost 200 million tonnes of iron ore to China, and was recently extended.

“ In 2008 Rio Tinto featured in the largest foreign investment ever made by a Chinese company, when the Aluminium Corporation of China (also known as Chinalco) acquired a nine per cent interest in the group to become its largest shareholder.

“ 2009 – China accounts for a quarter of Rio Tinto’s global revenue, with sales of nearly US$11 billion (rising from US$400m in 2000). In addition to being the home of Rio Tinto’s

largest shareholder, China – the world’s largest consumer of iron ore, coal, aluminium, copper and nickel – is also its biggest market. That relationship works both ways, and China is also a major supplier of goods to Rio Tinto, from tug boats and ship loaders to rail cars and truck bodies. Over the past year alone the Rio Tinto group has purchased approximately US$400m in goods from China, and that amount is set to increase as the Group strengthens its ties with Chinese suppliers. One of the main challenges facing China over

the next few decades will be ensuring a stable and secure supply of raw materials to feed its continued growth. Given China’s sheer size, even

40 Australia China: BEYOND TOMORROW

growth at a slower rate will add a huge amount of additional demand for resources that is well in excess of current supply. Rio Tinto is investing heavily in new and

existing projects around the world to help meet this need. Since July 2010, Rio Tinto and its joint venture partners have announced US$6 billion of new investment in its world class Pilbara operations in Western Australia, with the majority being spent on expansion projects to meet China’s expected demand for iron ore. This expansion project is intended to boost

production capacity by more than 50 per cent over the next five years, with plans to reach 333 million tonnes a year. This will be the largest mining project ever undertaken in Australia, and will help ensure security of supply to fuel China’s growth for decades to come. To maximise the productivity and efficiency of

its projects, while minimising their environmental impact, Rio Tinto is also a world leader in the development of advanced mining technologies through its Mine of the Future™ program.

As part of this program, Rio Tinto launched

its high-technology remote operations centre earlier this year in Perth, Western Australia. From this centre, Rio Tinto can now control its mines, rail systems, infrastructure facilities and port operations in the Pilbara region, up to 1500km away. The centre is linked to a network of driverless

trucks, remotely operated drill and blasting equipment, automated train systems and remote loading functions, and is just the first stage of

IMAGES:

MAIN: Exploration of the Simandou range in Guinea, West Africa.

ABOVE:

Signing of the Simandou joint development agreement in Beijing, July 2010.

AUSTRALIA

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