Rio Tinto invests £190m in driverless trains to boost iron ore

June 16, 2008

June 15th (Telegraph) – Rio Tinto will today unveil a $370m (£190m) investment in driverless trains as the company details its plans to boost production at its Australian iron ore operations by almost 50pc.

News of the investment comes as Rio chief executive Tom Albanese hosts a week-long mine tour to the country for major institutional shareholders in an attempt to win support for his rejection of BHP Billiton’s £61bn hostile offer for its rival.

Mr Albanese will take 30 investors – believed to include fund managers from Fidelity, Capital International and Alliance Bernstein – on a tour of iron ore deposits in the Pilbara, bauxite operations at Weipa and its aluminium smelter in Tomago.

But key to the message he will deliver as he seeks to fight off BHP’s unwelcome attention will be plans to take iron ore production at the Pilbara from 220m tonnes a year to 320m tonnes.

Mr Albanese believes such expansion products are why the 3.4-for-1 share offer from BHP undervalues the company, although Rio shares are currently trading below the offer price.

All mining groups have suffered from acute labour shortages in Western Australia. Expansion plans have also been hit by the scarcity of equipment as the current commodity boom has sent demand soaring.

The plan to introduce driverless trains to transport the ore on its 800-mile journey from the Pilbara to port locations is part of the process fully to automate mining operations, which will also see driverless trucks and automated drills.

It should enable Rio to boost production without the need to hire more workers and operate more of the mine directly from a control room in Perth.

The fully loaded trains weigh around 30,000 tonnes, are 2.4km in length and travel at an average speed of around 45mph.

Mr Albanese said: “I am committed to making our vision of the ‘mine of the future’ a reality, and automation of our rail network is an important step.

This innovation will allow us to deliver more tonnes, faster, to meet the continuing surge in demand for iron ore from China and other emerging economies.”

It is the first time that automation has been used in a heavy haul railway of this scale.

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