Rio Tinto’s Chief Executive Officer, Iron Ore, Andrew Harding, talks to Australasian Mining Review about the future of iron ore mining in Australia and what part Rio’s Mine of the Future program will play in it.
The past six months has been a turbulent time for iron ore globally. Some are predicting the price to drop as low as $US80 per tonne in coming years as Chinese demand softens. What expectations do you have for the iron ore market heading into 2015?
In line with the overall global economic outlook, we consider the long-term fundamentals for iron ore to remain sound, with demand growth tightly linked to rapid urbanisation and rising incomes in China and the developing world.
We do expect iron ore prices to moderate over the coming years as growth in low-cost seaborne supply outpaces growth in demand. Seaborne suppliers are estimated to have added more than 100Mt/a of iron ore supply capacity in 2013, and exports are expected to continue gaining momentum in the short to medium term. The majority of our seaborne supply growth is expected to go into China.
Our assessment remains that China will reach around 1 billion tonnes of crude steel demand by 2030.
Other considerations will also impact iron ore demand:
- Scrap steel will impact Chinese iron ore demand towards 2025, as a generation of buildings, machinery and automobiles are recycled;
- A response to air quality concerns in China is likely to see old steel-making capacity being closed in favour of newer lower polluting mills.
- Higher standards in air quality control is likely to drive demand for higher grade iron ore products, both lump and pellet and higher grade fines. Low grade iron ore with high impurities will come under pressure.
With its low cost and quality position and proximity to China, Rio Tinto is well placed to take advantage of demand growth for seaborne iron ore through its expansions.
There’s been a lot of buzz about Rio Tinto’s roll out of AutoHaul®, the world’s first automated heavy-haul rail system, in your WA iron ore network. How far away is AutoHaul from becoming fully operational and unmanned?
We are leading the world in rail innovation with AutoHaul®, which will be a key contributor to us meeting our iron ore production targets, as we expand to produce 360 million tonnes a year, and improve the efficiency of our business, including a reduced number of trains.
AutoHaul® brings significant benefits to the safety and wellbeing of our people and the community, through the implementation of safer systems, new processes and by reducing or removing hazards and high-risk work factors.
Work on this project is progressing.
Subject to obtaining regulatory approvals and the successful completion of the project stages, we expect it to be fully operational in 2015.
What have been the biggest challenges in introducing a world-first project like AutoHaul®? What has been the reaction from the public and employees?
Once it is complete, AutoHaul® will be the world’s first fully autonomous, heavy-haulage, long-distance railway network.
The savings and productivity gains that AutoHaul® will deliver are transformative, not to mention the tremendous contribution it will make to safety, not least by removing the current need to drive more than 70,000 kilometres each week, just to get our train drivers in the right place to start or finish their shift.
Our people and our culture are fundamental to achieving success in AutoHaul® and there is a lot of excitement because it is a world-first, and all of our people who have been involved have enjoyed working on this challenging and complex project.
People are at the centre of what we are doing with AutoHaul® – developing, testing and eventually operating these new technologies. AutoHaul® will also provide opportunities for people to be trained in new roles and obtain new skills that will be at the forefront of mining in the future.
After AutoHaul comes online, what will be the next major project tackled by Rio Tinto’s Mine of the Future programme?
We are working on numerous projects to ensure Rio Tinto stays at the forefront of mining technology and innovation.
Other components of our Mine of the FutureTM programme that we are currently trialling include:
- VK1TM Airborne Gravity Gradiometer (being developed in conjunction with the University of Western Australia), which is a unique airborne survey technology that will measure the subtle changes in the Earth’s gravity field, making otherwise invisible buried ore bodies and structures visible; and
- Haul Truck Wheel Changer, which is a robotic system capable of automating certain tasks related to haul truck tyre maintenance that significantly reduces the exposure of maintenance crews to the safety hazards and risks posed by the size and weight of the haul truck tyres being changed (between 5000 to 7,500 kilograms per wheel/rim & tyre) and the manual operation of the rattle guns used to remove and torque wheel nuts.
What gains have you seen from your Automated Drilling System (ADS) since it was rolled out in 2008? Are there plans for expansion?
We are currently operating four autonomous production drills designed to provide a reliable and repeatable process in blast-hole drilling. Autonomous drills bring improved operator safety, drilling precision, and better equipment utilisation.
Using the technology, a single operator manages the automated operation of multiple drill rigs from a remote location. The ADS uses new real-time automation control algorithms, integrated with off-the-shelf embedded processing technology. The system uses information from sensing technologies including lasers, GPS and existing original equipment manufacturer (OEM) components to achieve reliable automated operation.
As of mid-February 2014, ADS has drilled over one million metres in automation.
We expect to have six autonomous production drills in operation by the end of 2014.
There have been reports that BHP Billiton plans to reduce its iron ore workforce by 20% due to the recent slump in iron ore prices. Does this concern you considering how much Rio Tinto has invested into WA and the Mine of the Future programme?
I won’t comment on the plans of other companies, but we are very excited about our plans for the future, including our work to lead the development and adoption of new technologies and innovations.
First and foremost, it helps us to improve the safety of our people. This is fundamental in our business because there is nothing more important to us than preventing serious injury, or worse, and ensuring everyone goes home safely at the end of every day.
“We expect to have six autonomous production drills in operation by the end of 2014.”
We are also continuing our relentless and deliberative focus on removing costs from the business, with initiatives across operations, maintenance and better planning. This is a journey that we will be on for some time and initiatives, such as the Mine of the FutureTM will play their part.
We remain very confident that the Mine of the FutureTM programme represents the future of mining, which is about developing and delivering next-generation systems and technologies that will help us to drive down costs, improve productivity and reduce our environmental footprint.
Ultimately, the Mine of the FutureTM programme – like everything we do – is about delivering value and competitive advantage to Rio Tinto and our shareholders.
Recently Rio Tinto reached a milestone with your Pilbara iron ore network reaching a run rate of 290 million tonnes a year (Mt/a). How were you able to reach this milestone two months ahead of schedule?
At the end of April, our Pilbara iron ore system of mines, rail and ports reached a run rate of 290 Mt/a, two months ahead of schedule.
The value-creating achievement of the full 290 Mt/a run rate further underlines the world- class status of Rio Tinto’s West Australian iron ore operations. It follows completion of the infrastructure component in September 2013, which itself was delivered four months ahead of schedule and $400 million under budget.
This was an important milestone which adds real value for our business. It builds on an impressive track record, achieved through our culture of driving productivity and unquestionably the quality of our people.
We were able to reach this milestone ahead of schedule through a combination of initiatives, including working closely with the project teams on construction timeframes and securing various low-cost productivity gains across the supply chain.
Your next plan for expansion is to reach the milestone of 360 Mt/a across all Pilbara operations by 2017. How are you working towards achieving this goal and are expansion plans currently on target?
We are continuing work to optimise the next stage of the 360 programme.
In terms of infrastructure, the rail duplication and track work required for the 360 Mt/a expansion is now complete and critical 360 Mt/a port infrastructure remains on track for completion by the end of the first half of 2015.
In November 2013, we outlined our breakthrough plan to optimise the growth of mine capacity towards 360 million tonnes a year (Mt/a) at a target all-in capital intensity of between $120-130 per tonne, significantly lower than originally planned.
A series of low-cost brownfield expansions will bring on additional tonnes to feed the expanded infrastructure. From a base run rate of 290 Mt/a in May 2014, annual mine production capacity is planned to increase by more than 60 million tonnes between 2014 and 2017.
The majority of the low-cost growth will be delivered in the next two years, with mine production of more than 330 million tonnes (100 per cent basis) expected from the Pilbam the Pilbara in 2015.