Commodities
Rio Tinto commits $1.9 billion to Kangwinan bauxite mine in Queensland, targeting first output in 2029
The new mine adds 20 million tonnes a year of capacity at Weipa, but mostly replaces ageing pits, lifting the operation's total by about 6 million tonnes.
HedgeWeekly News Desk ·
Rio Tinto has approved $1.9 billion of spending to develop the Kangwinan bauxite project in Western Cape York, Queensland, the miner said late on Thursday US time. The project will add 20 million tonnes a year of capacity to its Weipa operations, with first output targeted for 2029 and full production by 2032. The budget includes $150 million of early works approved in 2025, and construction is due to ramp up in 2027.
Kangwinan lies about 15 kilometres south-east of Rio's Amrun mine. Ore will travel by a 15-kilometre conveyor to expanded stockyards and the Amrun wharf, which is being enlarged to load capesize vessels in a bid to cut freight costs. The bauxite will feed Rio's Australian alumina refineries and its overseas customers, and the company expects more than 1,300 construction jobs.
Rio classifies the outlay as replacement capital that sits within its existing mid-term spending guidance, and puts the expected internal rate of return at about 22%, based on third-party market forecasts. Its Sydney-listed shares fell 2.2% to A$147.05 on Friday, according to ABC News, on a day when the ASX materials sector was down 3.4% by early afternoon.
The headline capacity overstates the growth. Kangwinan is mainly a replacement for the Andoom mine near Weipa, which is approaching the end of its life this decade, and it also helps offset the planned 2029 closure of the Gove mine in the Northern Territory; on Rio's own figures, Weipa's annual capacity rises to about 44 million tonnes from about 38 million. Because the spend is already inside guidance, it does not change Rio's capital budget. The next item for investors is the adjacent Aurukun bauxite project, which Rio agreed last month to buy from Glencore and Mitsubishi subject to government approvals, and which would extend its footprint in the region further.