Speaking at a recent Melbourne Mining Club lunch, Rio Tinto Chief Executive, Iron Ore, Simon Trott, discussed his career in the industry, social license and the future of iron ore.
Having joined Rio Tinto in 1999, Mr Trott has more than 25 years’ experience in the industry. For the last three, he has been running the mining giant’s iron ore division, focusing on transforming the operating performance of the iron ore business, pioneering mine development and forging respectful, trusting relationships.
Learning from past mistakes
Mr Trott began leading Rio Tinto’s iron ore unit in 2021, following the blasting of Juukan Gorge in May 2020. Reflecting on the period since, Mr Trott said that an area Rio Tinto has focused on since that time is social license.
In all the jurisdictions around the world that Rio Tinto operates, the company is mining other people’s resources, Mr Trott explained. This same concept also goes for all other mining operations.
“For a mining company, you either have a strong social license, or you don’t exist.”
The rebuilding of this focus within the company happened faster than Mr Trott expected.
“I think part of it is that we aren’t creating something new. We are reconnecting with some of the heritage of Rio Tinto and CRA from days past.
“It’s easier to reconnect with something than to create something new.”
To reconnect with the company’s heritage, Mr Trott said Rio Tinto has implemented changes in three key areas.
Firstly, the company has changed how it mines.
“The way we’re operating on the ground today is very different than a few years ago – new blast management plans mean smaller benches, lower powder shot ratios and reduced drill diameters to effectively minimise vibration at the margins of our mines.”
Secondly, Rio Tinto is changing how it engages. Mr Trott used the example of the Western Range, which is an iron ore project that is currently under construction in the Pilbara. He said the project was designed in collaboration with the area’s Traditional Owners.
Finally, Mr Trott said that the depth of engagement with threshold owners across the business has changed.
“Rio Tinto used to do that really well,” Mr Trott said, “and it’s great to reconnect with that history. However, the depth of the integration of that engagement at all levels of the organisation is different now than it used to be.”
Iron ore production strategy
When it comes to developing Rio Tinto’s production strategy going forward, Mr Trott said there are three main drivers behind the company revisiting its strategy.
First is the Simandou iron ore project in Guinea that the company is developing, and the ability to blend product from different countries with the company’s portside trading in China.
The second is the Rhodes Ridge project in Perth, which Mr Trott said gives the company some great options.
Thirdly, Mr Trott said that the nature of the Pilbara has changed in terms of costs and CAPEX.
“We need to ask the question: are we best utilising the ore bodies for those current settings?”
Additionally, he said there are two main considerations in the development of the strategy – which products the company mines and how they should be packaged for the market.
“We currently sell different products. The question is should some of them be joined together and sold as one product?”
Mr Trott emphasised that the Pilbara blend will remain a mainstay of Rio Tinto’s product offering. However, the way the company best packages the overall portfolio is yet to be determined.
Pilbara production
Regarding potential concern about international competition with Pilbara iron ore, Mr Trott said it’s important to remember the context of the overall seaborne iron ore market, which requires 1.6 billion tonnes every year.
He then explained the sheer size of the daily iron ore operations in the Pilbara.
“Every day, we mine the equivalent amount of earth to that which would fill all of Marvel Stadium.
“It is an amazing business,” Mr Trott said. “And it’s also an industry of scale.”
Mr Trott explained that additional resources around the globe will not take away from the Pilbara mining operations.
“The world is going to need those Fe units. I think the thing that is often missed is the size of the 1.6 million tonne demand.
“We’re going to need Simandou and more resources like it.”
Mr Trott explained that demand for iron ore remains strong, even with the inevitable plateau that is sure to come with fluctuating demand for steel in countries like China.
“China is at a structural peak in terms of steel demand. All economies go through an initial phase where they consume significant steel for new bridges, new houses, new roads. China is at that level now, but the demand stays strong.
“Iron ore will remain a large and very profitable market for us, even though we’re not going to see the same growth rates out of China that we saw in the last decade.”
Final words
When asked what he would like to see in Pilbara operations in ten years’ time, Mr Trott reflected on his time in the industry, noting that one of the rewarding yet challenging aspects about working in mining is that the decisions and actions taken often don’t express themselves until many years later.
“To answer the question, I simply hope that the business is stronger than it is today, and that others have the opportunities to work in a business like I’ve had.”
