Phase 1 of Zulti South will underpin RBM’s supply of zircon over the life of the mine. Credit: Rio Tinto

Rio Tinto has approved the next stage in the development of its majority-owned Richards Bay Minerals (RBM) operation in South Africa through the $463m construction of the Zulti South project.

Rio Tinto will have a $343m share in the investment, which will sustain RBM’s existing capacity and extend the mine life.

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At present, RBM operates four mines in the Zulti North lease area, alongside a mineral separation plant and smelting facility.

With the extension of the Zulti South mine, RBM will be able to maintain its output of high-margin zircon and rutile at a time when the orebody grade at the company’s existing Zulti North lease area is declining.

Rio Tinto chief executive Jean-Sébastien Jacques said: “Zulti South is one of the best undeveloped minerals sand deposits in the industry, and will significantly extend RBM’s position as a world-class, first-quartile asset.

“The long-term fundamentals of the market remain strong, and production from Zulti South will commence in time to fill a widening supply gap, ensuring RBM’s position as a leader in the sector, and delivering strong returns to our shareholders.”

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Phase 1 of the Zulti South mine will underpin RBM’s supply of zircon and ilmenite over the life of the mine.

Construction on Zulti South is subject to the granting of all necessary permits and is scheduled to start in the middle of this year, with first commercial production expected in late 2021.

“Zulti South is one of the best undeveloped minerals sand deposits in the industry, and will significantly extend RBM’s position.”

The investment will be completely self-funded from RBM’s cash flows.

RBM, which produces predominantly rutile, zircon, titania slag and high purity iron, will process production from Zulti South through its existing infrastructure.

With a 74% stake in the company since 2012, Rio Tinto manages the operation. Another 24% is held by Blue Horizon, a BBBEE consortium consisting of lead investors and the four host communities, while the remaining 2% of the shares are held in an employee trust.