Ausgroup: Rio Tinto, the world’s 3rd largest mining company, and partners has approved a US$3.4b expansion of its iron ore operations in Western Australia as part of a plan to boost output by more than 50%. Rio Tinto will spend US$2.2b to extend the life of the Nammuldi iron ore mine in the Pilbara region to increase prodn capacity to 283m tpa by 2H13.
This is positive news for Ausgroup, which has in Oct 11 secured a $22m contract from Rio Tinto to construct an iron ore pilot plant at the Brockman mine located in the Pilbara region and is well-positioned to ride on the aggressive expansion plans of Rio Tinto in Western Australia. The group has on hand an orderbook of A$300m. Stock currently trades at 0.93x P/B with no broker coverage.
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