Rio soars on savings from plan to boost Oz production

Rio Tinto shares rose to the top of the Footsie today after the mining giant said it had found $3 billion (£1.84 billion) of savings from plans to increase production in iron ore-rich Western Australia.

Chief executive Sam Walsh is looking to cement Rio’s position as the world’s second-biggest miner by increasing its iron ore production target in the region by nearly a quarter to around 360 million tonnes per year.

Walsh said $400 million of capital expenditure on plant equipment and heavy machinery has been approved to help expand production in the area’s mines.

This is cheaper than opening fresh mines. Rio has deferred decisions on starting operations on two new sites until late next year and 2016. Walsh described this plan as a “breakthrough pathway” that would result in “unleashing low-cost productivity gains”.

Increasing iron ore production is seen as one of the major business opportunities for big-name miners.

Large-scale urbanisation in emerging economies, particularly China, means that there will be consistent, growing demand for iron ore for years to come.

The shares increased by 2.2% to 3207.5p.