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Rio Tinto's Expansion Plans on Track

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Mining giant Rio Tinto plc (RIO - Free Report) is on track to deliver its increased iron ore commitment. The company recently started shipping iron ore from the recently expanded port, rail and mine operations in Australia. Rio Tinto increased the Western Australia iron ore capacity to 290 metric tonnes per year in the first half of 2013.

The first iron ore delivery was ahead of schedule as well as within company budget, strengthening its belief that it will soon be able to expand the capacity further to 360 metric tonnes per annum. Rio Tinto is evaluating various alternatives including, but not limited to, expansion of existing mines and the potential development of new mines.

Western Australia has been a major source for Rio Tinto’s overall iron ore production. The company has been planning and implementing various extension and expansion plans in the region. Apart from this, the company has been eyeing expansions in various other fronts as well.

In July, Rio Tinto started coal production at the $2.0 billion Kestrel Mine Extension, near Queensland, which will add 20 more operational years to the mine. Kestrel South is expected to reach full capacity by the end of 2014 and produce an average of 5.7 million tonnes per annum over the next 20 years.

During the same month, another milestone was achieved when Rio Tinto’s subsidiary, Oyu Tolgoi, started shipping its copper concentrate to customers from its copper and gold mine in Mongolia. The project involved a total cost of $6.2 billion.

With such expansion plans in hand, we expect the company to achieve better results in the quarters ahead. At the half-year production levels, the company achieved a record iron ore production with the production increasing 6% year over year in the first half of 2013 and shipments rising 4% from the year-ago comparable period.

Rio Tinto currently carries a Zacks Rank #3 (Hold). Other mining stocks worth a look include Avalon Rare Metals Inc. , Denison Mines Corp. and US Energy Corp. . Each of these carry a Zacks Rank #2 (Buy).

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