JOHANNESBURG (Business Day) -- This contrasts with the nervousness that has hit the mining sector - particularly explorers and companies looking to finance projects, as commodity prices have plunged and credit has evaporated.
Rio Tinto CEO Tom Albanese said in an interview this past week that although Rio Tinto was reviewing its global pipeline of new projects, he did not believe any projects would be terminated as all of them were important.
"But we may see some deferred in timing, both as a consequence of global demand being less for some time, and because we see an opportunity to re-test engineering inputs. In the next year we will see construction costs come down."
Rio Tinto, the target of a hostile takeover bid by rival BHP Billiton at present, is showing greater interest in southern Africa than Billiton, despite Billiton's roots in former Afrikaner mining house Gencor.
Gencor put its nonprecious metals assets into London-listed Billiton, which merged with Australia's BHP in 2001.
Most of the coal coming on stream from Billiton's two projects under development in South Africa will replace, rather than add to its output. It has recently closed two potlines at its Bayside smelter in South Africa because of power constraints. It has been expanding output of manganese and manganese alloys in South Africa in response to sharply higher prices and improved logistics, but manganese is a very small contributor to the group. Billiton also has exploration projects in Mozambique, the Democratic Republic of Congo and west Africa.
By contrast, Rio Tinto is building a new mineral sands project and port at its QIT Madagascar Minerals (QMM) at Fort Dauphin in Madagascar. It is extending the lives of, and looking at ways to expand output at its 58%-owned Palabora copper mine in South Africa and 69%-held R"ossing Uranium in Namibia. It is also pursuing an iron-ore project at Simandou in Guinea, and is looking at other projects in alumina and bauxite in Cameroon, Ghana and Madagascar.
In addition, it owns 78% of the Murowa diamond mine, 50% of Richards Bay Minerals in South Africa (Billiton holds the other 50%) which is concluding an empowerment deal, and is exploring for coal in South Africa, mineral sands in Mozambique and other minerals elsewhere in Africa.
Asked whether recent difficulties encountered by mining companies in Africa - where Zambia introduced a new windfall tax on copper, the Congo reviewed all mining licence agreements, and Zimbabwe introduced a 51% indigenisation policy - were a deterrent to investing in Africa, Albanese said Rio Tinto had a clear policy of not supporting any particular party or government.
The group found it useful to partner with the International Finance Corporation, which is associated with the World Bank in various countries, including on its Simandou project.
"We do not avoid risk, we manage it," he said. "We recognise that few things in the world have complete certainty, and we have observed that when prices are high, pressures on royalties and taxes are as visible in countries like Australia as they are in Africa."
At QMM in Madagascar, Rio Tinto will start first production of ilmenite before the end of this year on a project which has a 40-year life. At full production, it will need 600 workers, half of whom will come from the surrounding area. It will also employ about 2200 people from the most vulnerable areas on rehabilitation work.
The port, which will be completed by the middle of next year, will provide an export facility for other local production, including sisal, lobsters and medicinal plants.
At Palabora, which is 42 years old, management is looking at ways of extending the life of the underground copper mine by either extending workings to the west, or building a second, deeper mine below the current one, which will access the same vertical shaft.
These steps could extend the life of the mine by years.