PERTH (miningweekly.com) – The board of diversified major Rio Tinto has approved the expansion of its iron-ore operations in the Pilbara to 360-million tonnes a year by 2017.

The group on Thursday unveiled a less costly, slower expansion path, using brownfield projects and productivity gains to reach its target of 360-million tonnes a year in the Pilbara.

CEO Sam Walsh announced that the planned mine expansion would be delivered at an estimated capital cost of more than $3-billion below previous expectations.

The additional production would be achieved at an all-in capital intensity of $120/t to $130/t, including the cost of infrastructure growth and mine capacity.

Rio Tinto initially expected to expand its capacity to 360-million tonnes a year by 2015. However, its new expansion plan means it will produce 330-million tonnes a year by 2015.

From a base run rate of 290-million tonnes a year by the end of the first half of 2014, mine production capacity would increase by more than 60-million tonnes a year between 2014 and 2017.

Its rail and port facilities are being expanded to 360-million tonnes a year and will reach that capacity in 2015.

Extra iron-ore tonnes will come from multiple mines, including Brockman 2 and Brockman 4, Yandicoogina, Paraburdoo and West Angelas. Walsh said the series of low-cost brownfield expansions would add early tonnes to feed the expanded infrastructure currently being developed in Western Australia.

Owing to the early tonnes delivered through the brownfield projects, Rio Tinto has deferred an investment decision on the development of the greenfield Silvergrass mine to the third quarter of 2014 and a decision on the proposed Koodaideri greenfield mine until 2016..

The group’s board on Thursday approved $400-million for plant equipment and modification, and additional heavy machinery for use at various mine sites in the Pilbara.

Rio Tinto iron-ore CEO Andrew Harding added that the latest investment was driven by the attractive long-term fundamentals for iron-ore, which were underpinned by urbanisation and income growth in the developing world, particularly China.

“By delivering these additional tonnes we will capture a greater share of demand and ensure we continue to enjoy the best returns in the industry.”

Harding added that the breakthrough iron-ore optimisation pathway Rio have unveiled on Thursday represented the best use of capital for the company’s shareholders and that its use of innovative technology would drive the business forward for decades to come.