International diversified-miner Rio Tinto will purchase three 250,000-ton ore carriers to transport iron-ore from its mines in the Pilbara, in Western Australia, and potentially from Simandou, in Guinea, to customers in China and elsewhere, it said on Monday. The cost of the three vessels would be about $315-million, the mining giant said in an emailed statement. The vessels, to be built by Namura Shipyards in Japan and delivered from late 2012, would play a critical role in consolidating Rio Tinto Iron Ore's position in the global market, the company explained.
The group has also reserved rights on another two vessels of similar size.
Rio Tinto said that China's iron-ore imports had grown substantially in recent years and that it could more than double after 2010.
To maintain and increase its share of this growth, Rio Tinto Iron Ore was expanding the capacity of its Pilbara iron-ore operations to 220-million tons by 2009, supported by long-term contracts, hybrid contracts and spot sales, it explained.
During its investor seminar on November 26, 2007, Rio Tinto said its growth strategy in iron-ore and its strong pricing outlook would allow the group to build a conceptual pathway to treble production to over 600-million tons of iron-ore a year from Australia and Guinea. "Competitive freight and freight management are important levers in our growth plans. These very large ore carriers will assist us in continuing to provide our customers with better delivery options well into the future while locking in low, long-term freight rates for the benefit of our shareholders," Rio Tinto Iron Ore CE Sam Walsh commented in a statement, "These fit-for-purpose vessels are designed for maximum loading at Rio Tinto's iron-ore ports. The timely acquisition of these vessels, and the related options, provides us with maximum flexibility in developing our future marine strategy," said Rio Tinto Marine MD David Peever. Peever said that the group, through Rio Tinto Marine, managed a freight portfolio with a strong focus on long
term, low cost freight positions. "During 2008, we will be considering commercial options and partnerships to further leverage our very sizable freight business," he noted.
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