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News Releases 2008
Decision on Investment to Expand Supply Capacity in West Australian Iron Ore Operations - Toward an improved supply capacity that responds to long-term growth of iron ore demand
November 25, 2008
ITOCHU Corporation and Mitsui & Co., Ltd. (head office: Chiyoda-ku, Tokyo; president: Shoei Utsuda; hereinafter “Mitsui & Co.”) have decided to invest in further expansion of the supply capacity of their West Australian iron ore operations. These operations are run as a joint venture with leading mining company BHP Billiton (Australia/UK).
ITOCHU Corporation and Mitsui & Co., together with BHP Billiton, own the three iron ore joint ventures (JVs) of Mount Newman, Yandi and Goldsworthy in Western Australia (BHP Billiton holds an 85% share, ITOCHU 8%, Mitsui & Co. 7%). Shipments totaling 111 million tons were made in 2007 by the three joint ventures, primarily to Asia.
Demand for iron ore is expected to continue growing over the medium and long term, primarily in newly developing economies such as China. To respond to the long-term increase of this demand, ITOCHU Corporation and Mitsui & Co. together with BHP Billiton, have decided to invest in the expansion of iron ore supply capacity through our West Australian iron ore operations.
These operations have been developing stepwise expansion plans called Rapid Growth Projects (RGP), and construction work is currently underway to increase yearly shipment capacity to 155 million tons by 2010, primarily based on increased production at the Mount Newman mine (RGP-4). This investment decision is aimed at implementing RGP-5—under which yearly shipment capacity will increase by 50 million tons, reaching a total of 205 million tons—RGP5 development will occur in parallel with current RGP-4 development. The main investments under RGP-5 will be in the expansion of loading facilities at Port Hedland (Finucane Island), construction of a duplicate line for the Port Hedland Newman Railway running between the mine and the port, construction of additional ore-processing facilities at the Yandi mine, and expansion of facilities at Mining Area C (Goldsworthy JV). The joint venture aims to begin shipping the increased iron ore output from RPG-5 by the second half of 2011.
In February this year, we decided on a partial upfront investment with a plan to expand yearly supply capacity to more than 200 million tons. The current decision is aimed at carrying out the expansion plan itself. Investment will total US$5.6 billion (approx. ¥532 billion), with the ITOCHU and Mitsui & Co., share at approximately US$840 million (approx. ¥79.8 billion; ITOCHU = approx. ¥42.6 billion, Mitsui & Co., Ltd. = approx. ¥37.2 billion) including the abovementioned upfront investment.
