Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) and privately owned Hancock Prospecting said on Tuesday (June 24) that they will invest US$1.6 billion to develop the Hope Downs 2 iron ore project in Pilbara, Western Australia.
According to Rio Tinto, Hope Downs 2 has received all necessary approvals and is set to sustain production from the Hope Downs joint venture, in which Rio Tinto and Hancock are equal partners.
Each company will shell out US$0.8 billion for the project.
Hope Downs 2 holds the Hope Downs 2 and Bedded Hilltop deposits, which will have a combined total annual production capacity of 31 million tonnes.
“Approval of Hope Downs 2 is a key milestone for Rio Tinto, as we invest in the next generation of iron ore mines in the Pilbara,” said Rio Iron Ore Chief Executive Simon Trott in the company’s press release.
“These projects are part of our strategy to continue investing in Australian iron ore and to sustain Pilbara production for decades to come, supporting jobs, local businesses and the state and national economies.”
Pilbara is one of Australia’s key mining regions and has been critical to global steel supply for more than six decades.
The joint venture between Rio Tinto and Hancock was established in 2006. Production at Hope Downs 1 began in 2007.
In 2018, the joint venture opened Baby Hope, a new deposit at Hope Downs that was developed to help sustain existing capacity at the Hope 1 operation and support ongoing jobs at Hope Downs.
According to Rio Tinto, an average of 950 jobs will be created during construction of Hope Downs 2, and approximately 1,000 jobs will be sustained at Greater Hope Downs once operational.
The company expects to invest more than US$13 billion on new mines, plant and equipment from 2025 to 2027.
Rio Tinto and Hancock said ore from the new deposits will be processed at Hope Downs 1, with first ore expected and associated infrastructure planned to be operational by 2027.
Other Rio Tinto developments
Earlier this month, Rio Tinto opened the US$3.1 billion Western Range iron ore mine in Western Australia.
Western Range is a joint venture between Rio Tinto and China Baowu Group, a state-owned iron and steel Chinese company. The operation is projected to produce up to 25 million tonnes of iron ore annually.
Rio also recently announced a leadership shakeup after Chief Executive Jakob Stausholm stepped down.
Hancock to unite Roy Hill and Atlas Iron
In a separate development, Hancock said it is uniting its Roy Hill and Atlas Iron operations under a new banner called Hancock Iron Ore. The major operational realignment is set to take effect on July 1.
Executive Chair Gina Rinehart said that the world of iron ore is evolving, so Hancock follows.
“We are not just rebranding. We are building on the exceptional legacy and remarkable achievements of Roy Hill, Atlas Iron and Hancock,’ Australian Mining quotes her as saying.
Roy Hill is among Australia’s leading iron ore miners, delivering approximately 64 million tonnes annually to steelmaking markets in nearby Asia. Atlas Iron exports 10 million tonnes a year.
The latter was acquired by Hancock in 2018 and has since undergone ‘a successful operational turnaround.’
Hancock and Rinehart have a long history of investing in Australian iron ore and other commodities.
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
