Rio Tinto approves $1.9bn Cape York bauxite project expansion

The initial output should be 22.8m tonnes a year of bauxite, which is used to make aluminium, increasing annual bauxite exports from Cape York by around 10m tonnes annually to help meet growing bauxite demand from China.

Chief executive Sam Walsh said Amrun will generate attractive returns, with mining costs in the first quartile of the industry cost curve.

"This long-life, low-cost, expandable asset offers a wide variety of development options and pathways over the coming decades. We are establishing Cape York bauxite as the product of choice for the Chinese seaborne market with consistent quality, security of supply and strong technical marketing support.

"Amrun will be significant in helping to meet growing bauxite demand from China."

Production and shipping should begin in the first half of 2019, ramping up to full production by the end of the year, with the project designed to allow the option for future expansion to 50m tonnes a year.

Credit Suisse stayed with its 'neutral' rating in the short term and said it believed the move to be a "sensible project with good returns".

Rio Tinto shares, however, fell alongside their blue chip peers, down 1.8% to 2,230.5p at 1000 GMT on Friday.