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Rio Tinto said it plans to invest $270 million in the construction of a new molybdenum autoclave process (MAP) facility at its Kennecott Utah Copper (KUC) Bingham Canyon operation in Salt Lake City.
The investment will enable lower-grade concentrate to be processed more efficiently than conventional roasters, allow improved molybdenum recovery and operating flexibility and enable production of chemical grade molybdenum products, the company said.
'The outlook for molybdenum demand is very strong, driven by the rapid urbanisation and industrialisation of China and India,' said Tom Albanese, chief executive of Rio Tinto.
Molybdenum is a by-product of copper production and is used in metal alloys, including steel, to enhance toughness, high temperature strength and corrosion resistance.
KUC is one of the world's lowest cost producers of copper, and molybdenum and gold production at Bingham Canyon are major contributors to this position.
Rio Tinto said the planned investment will enable the company to increase revenue, expand molybdenum production, simplify operations, provide flexibility in mine planning and contribute to its sustainable development initiatives.
MAP will also make it possible for Rio Tinto to recover rhenium from its concentrate and become a secure long-term supplier, the company said.
The facility will have capacity to produce up to 9,000 pounds of rhenium per year. Rhenium is used as a catalyst in making lead-free, high-octane gasoline.
The MAP facility is scheduled to begin operating in the third quarter of 2010.
Earlier Wednesday, Rio Tinto said it is facing queries from the Guinean government over the validity of the mining concession for its $6 billion Simandou iron ore development, a key growth project the world's third-largest miner has been promoting as it fends off a hostile takeover offer from the world's top miner, BHP Billiton.
The office of the president of the West African nation has sent the miner a letter questioning the validity of the mining concession for the project, which is slated to begin production in 2013, ramping up to output of 70 million tonnes a year by 2018.
Rio Tinto said the letter refers to a review of the concession by the presidential legal advisory team that queries the validity of the decree that granted the concession to Rio Tinto, but not the validity of the Rio Tinto Simandou 2002 Mining Convention, which has been approved by law.
'Rio Tinto is confident that its convention and concession are in all respects in conformity with Guinean laws in their current form,' the group said in a statement.
'This view is also supported by a letter from the president of the National Assembly in Guinea.'
Rio Tinto said it is assessing the issues raised in the letter and is in talks with senior government representatives to resolve issues it believes are based on a misinterpretation of the convention.
The queries come as BHP Billiton continues to highlight what it believes is a less risky growth profile than Rio Tinto's as it attempts to win over Rio Tinto shareholders.
BHP Billiton chief executive Marius Kloppers, in a television interview on Sky Television's business channel in Australia, said his group's project pipeline was more advanced than Rio Tinto's.
'They've highlighted growth options that are not at the same level of maturity as ours -- pretty much the same as things in our five-year forecasts. They're at a different stage of execution and have a different level of risk and a different level of certainty attached to it,' Kloppers said.