Looking back to the development of the international steel industry

In 2010, driven by the gradual recovery of the global economy, international steel demand picked up, steel mill capacity utilization resumed, and operations improved. However, the recovery of Europe, the United States and other developed countries is still slow, especially after the withdrawal of the automobile industry's stimulus policy, the automobile's demand for steel has weakened, and the continued decline in real estate has led to a decline in steel demand. In December, stimulated by the expected increase in raw material costs, markets in Europe and the United States set off a wave of price increases to boost the rise in international steel prices.

The global economic outlook remains unclear. In 2011, the global steel demand growth rate will decline significantly. Coupled with inflationary pressures and rising costs of iron ore and coking coal, the profitability of steel manufacturers will narrow. ArcelorMittal, the world's largest steel producer, predicts that global steel demand will increase by 5%-6% in 2011. The growth is mainly from Asia and emerging economies. Although China is still in a healthy growth, the growth rate is slowing down. The recovery in Europe and North America is still slow.

Faced with the uncertainty of global economic growth, rising raw material costs and more frequent market fluctuations, major steel manufacturers in the world are actively responding to further increase their competitiveness to adapt to changes in the market. Major international steel mills such as ArcelorMittal, Nippon Steel and Posco have certain measures in terms of operation and management, cost reduction, acquisition of raw materials and overseas expansion, and are worth learning from.

I. Continue to implement cost reduction measures ArcelorMittal and Pohang Steel have achieved satisfactory results in the cost reduction measures of major steel mills in the world. In the first half of this year, ArcelorMittal achieved cost reductions of 3 billion U.S. dollars through various cost-reduction measures such as production cuts and optimized production, which achieved its annual cost reduction targets. Posco continued to implement a cost-reduction plan by expanding the use of low-cost raw materials and recycling by-products. The accumulated cost savings in the first three quarters of this year amounted to 1.023 trillion won, and has now completed 89% of the annual cost reduction target (1.15 trillion won).

In terms of timely adjustment of production rhythm and control of the market, ArcelorMittal can be said to be quick and effective. The company has a total of 25 blast furnaces in Europe, with a maximum of 23 operations during the peak demand period. During the financial crisis, the number of blast furnaces was reduced to 11 and then returned to 18. In the global financial crisis at the end of 2008, ArcelorMittal reduced production by 45% and capacity utilization was less than 50%. It remained at 59% in 2009 and gradually recovered to 78% by June of this year. Facing the slow recovery of European demand in the second half of the year, ArcelorMittal decided to close three blast furnaces in Europe, reducing the number of blast furnaces in operation in Europe from 18 to 15, and the operating rate to 71%.

In the face of sluggish domestic demand, Posco further strengthened management and management, further strengthened inter-departmental collaboration and cooperation, enhanced responsiveness to user needs, coordinated development of independent technologies, consultation on technological innovation, research and diagnosis of productivity, and implementation of cost reduction measures. In 2010, Pohang undertook a large-scale reorganization such as the formation of a new growth and investment department, the integrated sales and production department, the establishment of a new Chief Technology Officer (CTO) position, and the integration of existing financial, administrative, sales, and production technologies. The five stainless steel divisions were reorganized into Strategy and Planning, Technology and Business, Growth and Investment, Carbon Steel and Stainless Steel. At the same time, POSCO launched its first global online procurement system in the overseas market using online transactions for the first time, making the procurement of raw materials more transparent and efficient. Pohang Vietnam Branch can share and process all information related to quotations, deals, orders, supplies, etc. in real time. Through a series of organizational restructurings, Posco has become more adaptable to market changes.

Second, strengthen the strategic alliance between steel companies Nippon Steel and Kobe Steel to develop dust reuse technology. Nippon Steel and Kobe Steel have stepped up their cooperation to win new roads to reverse the dilemma of steel mills in the raw material market. The two companies announced that they will cooperate in the construction of a direct reduced iron plant that uses steel dust to achieve the goal of improving recycling efficiency and achieving zero emissions. The plant is expected to be put into production in October 2011, with an annual dust handling capacity of approximately 220,000 tons and can produce 150,000 tons of direct reduced iron.

Nippon Steel and Posco strengthen their long-term strategic alliance relationship. In order to repay the goodwill of Posco to supply slabs to Nippon Steel in April and May of this year, Nippon Steel supplied 300,000 tons of slabs to the No. 4 blast furnace at Pohang Plant on July 3rd. In April and May of this year, an accident occurred at No. 2 blast furnace in the Nippon Steel Oita Plant, and there was a sudden shortage of slabs. At that time, Pohang provided assistance to Nippon Steel. Nippon Steel will also expand its technical cooperation with Indian steel mills such as the Indian Steel Authority (SAIL).

Nippon Steel also reached a technical cooperation agreement with Australia’s largest steelmaker, BlueScope, including joint R&D of coated products.
Posco has accelerated cooperation with SAIL in India. In May of this year, Pohang signed a memorandum with the Indian Steel Authority (SAIL) to build a steel plant in Boccaro using the Finex ironmaking process with an annual capacity of 1.5 million tons. At present, the two companies have begun to prepare detailed project reports, which include the technical and economic feasibility analysis of the project.

Pohang and ThyssenKrupp jointly manufacture and sell magnesium boards. The pioneer in the magnesium board casting and rolling process, Pohang Steel and ThyssenKrupp Steel in Germany, plan to jointly manufacture and sell magnesium boards for the automotive industry. Pohang owns magnesium plate casting and rolling equipment at Gwangyang Plant. ThyssenKrupp also owns the production equipment at the Freiberg Plant and was established in 2004. Both parties seek mutual support in production and sales. It is said that compared with the traditional magnesium plate production process, the casting-rolling process will greatly reduce the production process, such as the traditional production needs multi-pass rolling, preheating and so on. ThyssenKrupp said that the top plate made of magnesium plate will lose 62% more than the traditional steel plate, but it is expensive. The industrial production of magnesium boards still needs several years of research and may consider cost issues.

Indian steel companies have stepped up their cooperation with major international steel mills to increase their technological level. Currently, SAIL and Kobe are discussing technical cooperation based on different aspects of cooperation, including seeking cooperation in the application of ITmk3 ironmaking technology and constructing a steel plant with an annual capacity of 500,000 tons in the Durgapur area to match the special steel in the area. produce. Essa and Kobe will cooperate in the automotive steel field. For example, in the production and development of automotive steel, consideration is now being given to building a joint venture company that produces high-value steel. Earlier, Essa and Kobe Steel have signed cooperation agreements on steelmaking technology and raw materials. The signing of the new agreement will further strengthen ESA's investment in high-end technology applications.

India's Sunflag Steel Co., Ltd. has reached an agreement with Japan's Tatung Special Steel Manufacturing Co. to jointly develop special steel products for automobiles. Sunflag customers are mainly Indian automotive companies such as General Motors, Maruti Suzuki, Toyota Motor, Nissan Motors and others. Sunflag said that the company plans to build a special steel plant in the area near Nagpur in Maharashtra and plans to increase investment in special steel production technology development. Sunflag said that after realizing the localized production of imported auto parts in Japan, it can save a lot of costs for automakers in India. Both parties will also cooperate in equipment development and product upgrades.

Third, investment to increase raw material self-sufficiency rate ArcelorMittal has been committed to investing in the acquisition of more mines and the expansion of existing mine production in order to reduce dependence on the three major mines BHP Billiton, Rio Tinto and Vale. Investment activities in 2010 increase. The company plans to invest 4 billion U.S. dollars in the next five years, and the annual production capacity of iron ore will increase by 50%. By 2015, the output will reach 100 million tons and the self-sufficiency rate will be 75%-85%. The company continued to independently accelerate the development of West African iron ore projects and infrastructure construction. The first phase of the project is under construction. It is expected that shipments will start in the second half of 2011 and the annual output will reach around 15 million tons from 2013. It is estimated that Liberian iron ore project resources amount to 1.5 billion tons. ArcelorMittal plans to invest 400 million U.S. dollars in the development of Mexican iron ore, which will increase the annual production of Mexican iron ore from the projected 2 million tons this year to 60 million tons in 2013 and will be self-sufficient. Arcelor Mita will also bid $433 million for the Mary River Iron Mine in Bahia, Canada. After a series of ore asset acquisitions and capacity expansion, ArcelorMittal will gain a significant position in the raw material market and may become a supplier of iron ore commodities in the next few years. The company's existing mining operations are mainly distributed in Algeria, Liberia, Bosnia, Brazil, Canada, Kazakhstan, Mexico, Ukraine and the United States. The reserves of these mines are approximately 19 billion tons.

ArcelorMittal will accelerate the acquisition of metallurgical coal resources. Through joint venture development, it will acquire more metallurgical coal resources in the future, and the self-sufficiency ratio of coking coal will increase from the current 15% to about 25%. The company continued its exploration in some undeveloped regions such as Africa, and also expressed interest in the acquisition of Massey Energy, the largest coal producer in Appalachian in the eastern United States. In addition, it is also considered to establish a joint-stock company with Ukrainian Donetskstal Steel Group to jointly develop the Karagaylinskaya coal mine in the Kemerovo region of Russia. The mine is expected to have an annual production capacity of 1.5 million tons, and the output will increase in 2010. To 2.3 million tons. In addition, local companies such as Indian state-owned mining companies are also planning to jointly develop Indian coal and iron ore resources and iron mines in Senegal, West Africa.

Nippon Steel did not purchase raw material assets as extensively as ArcelorMittal, and its strategy was to jointly explore raw materials with overseas joint ventures to ensure cost competitive advantages. At present, the import ratio of Nippon Steel from its own overseas coal mines is 25%-30%, and the coking coal self-sufficiency rate is expected to increase further. So far, Nippon Steel has invested 8 times in overseas metallurgical coal assets, including 4 in Queensland, Australia, 3 in New South Wales and once in British Columbia, Canada. Nippon Steel acquired the 10% stake in Foxleigh Mine in Queensland, Australia, held by ITOCHU. It was Nippon Steel's 8th overseas metallurgical coal asset investment and was the first coal mine to acquire low-volume blast furnace coal injection (LVPCI). Nippon Steel will also join hands with Posco to acquire a 23% stake in the Revuboe coking coal project in Mozambique. The project is expected to cost US$600-600 million. The feasibility study will be completed in December 2011 and will be put into production in 2014 or 2015. Nippon Steel will receive about 1.7 million tons of coal annually from the Revuboe coal mine with an annual output of 5 million tons, and the coal self-sufficiency rate will increase from the current 25% to more than 30%.

This year, POSCO’s acquisition of raw material assets has been frequent, and joint ventures with small and medium-sized mines such as Australia, Brazil, or emerging resource countries have made some progress. In 2011, Posco will continue to increase its investment in raw materials. By 2014, the raw material self-sufficiency rate will increase to 34% and the target will increase to 50%. Posco has entered into an agreement with Anglo American Resources Group, the world's third largest exporter of bituminous coal, to acquire the entire mining rights of Bailongshan Coal Mine and 70% of the mining rights of SuttonForest Coal Mine. After acquiring a 7.8% stake in a new mine project in Tete Province, Mozambique, and a 3.75% stake in Western Australia’s RoyHill Iron Mines, Posco also expects to acquire coal and iron ore in Indonesia and plans to acquire Australian iron ore company AMCI (WA). ) 49% of the company's shares. Recently, Pohang also decided to cooperate with Russian Che Steel to jointly develop Russia's Far East and Siberian resources. Through cooperation, Pohang will join Car Steel's development of resource projects in Siberia, such as the large coal mines in Elga, to open access to the three northeastern provinces of China, Mongolia, and eventually to Europe through inland. Elga reserves are estimated at 2.2 billion tons, and it is expected to begin production at the end of this year.

China National Taiwan Steel Corporation will adopt various ways to diversify the supply of iron ore and coking coal. In order to meet the demand for raw materials for the expansion of steel production capacity in the future, Sinosteel is actively seeking investment acquisitions in Australia, Brazil, and Africa. Five projects are still under discussion. The goal is to increase the self-sufficiency rate of iron ore and coal mines from the current level of about 2 in the next five years. % increase to 30%. Sinosteel needs about 10 million tons of coal and 20 million tons of iron ore each year, and raw materials account for 70% of its cost. Currently, Sinosteel holds a 5% stake in the Sonoma coal mine in Australia and holds 1% shares in an iron ore project in Brazil (shared by six Japanese companies, South Korea's Pohang and Brazil's national steel company). Sinosteel also plans to jointly invest overseas iron mines with Baosteel.

Major Indian steel companies plan to set up a joint venture to acquire overseas coal assets and secure supply of resources through long-term contracts or participation in coking coal mines. The joint venture will likely be formed by SAIL. At present, only 25%-30% of the demand for coking coal in Indian steel companies is met through local resources and 70% depends on imports from Australia. Due to rising coking coal import prices and rising input costs, the profitability of Indian steel companies will gradually shrink. SAIL is looking for coking coal resources in Australia, the United States and Africa. It also plans to newly develop a coal mine with a capacity of 4 million tons a year in its own Tasra coking coal mine. JSW may invest 500 million U.S. dollars for overseas coal mine acquisitions. In May this year, it acquired 7 coking coal mines in the United States with reserves of approximately 123 million tons. Currently, coal and iron ore resources in Mozambique are being explored. Tata Steel will increase its shareholding in the Benga mine in Mozambique to 35%, and the shares in Rivers Mining will increase from 19.8% to the current 21.2% so that it can directly and indirectly purchase the mine's output. 50%. The reserves of the Benga coal mine have been increased to 502 million tons, and Tata will start a feasibility study on the annual output of the coal mine reaching 10 million tons.

IV. Accelerating the development of new technologies and new products With the intensification of competition in the global steel industry, major steel mills have invested heavily in the development of new technologies and new products, and have strengthened their technological reserves in order to increase their competitiveness.

ArcelorMittal has made new breakthroughs in automotive steel production technology. The company's six professional automotive technology research centers spent a total of two years on the development of the ''''''S-inmotion'''' project and achieved research results, bringing milestone innovations to the automotive industry, making them lighter and safer. And more energy-efficient. The '''''S-inmotion'''' process applies more than 60 inventions related to pressure hardened steel (PHS) and advanced high-strength steel (AHSS) to the automotive manufacturing process, bringing a variety of benefits to automobile manufacturers and users. interest. Take a C-class vehicle as an example. The ''''S-inmotion'''' reduces the weight of the 43 parts of the vehicle, so that the weight of the vehicle body is up to 19% or 73% lower than that of a car produced using conventional technology. kilogram. In addition, the use of '''''S-inmotion''' can also reduce carbon emissions by 13.5%, and will not affect the safety, durability and corrosion resistance of vehicles.

Tata Steel develops alternative fuels for blast furnaces in the UK - waste and plastics. Tata Steel of India signed a memorandum of understanding with the British Centre for Process Innovation to invest in a new technology innovation center at the Teesside Technology Centre in the UK. One of the research projects is to test the use of waste and plastic as alternative fuels in blast furnaces. The project's total investment of US$8 million will be a major breakthrough in the existing traditional production processes, and its process improvement, energy utilization, and reduction of raw material costs are equivalent to the pulverized coal injection process developed in the late 1990s.

Japan researches and develops super steel to bid farewell to iron ore. Japan has developed super steel, which has twice the strength of current steel and whose lifespan is twice that of today's steel. The first phase of development from 1997 to 2001 costs 12 billion yen; from 2002 to 2007, the second phase requires about 8 billion yen. One of the focuses of ''''Super Iron and Steel'''' research is the recycling of scrap steel. The goal is to make steel processed from scrap iron as raw material have equal or even higher quality than iron processed from iron ore. And it's cheap. All scrap iron may be made into ''super steel''', which means that Japan will not need iron ore. It is expected that in the fastest 30 years, it will be an era of ''''Super Steel'''. If there is demand from the industry, all scrap steel in Japan may be manufactured into '''super steel''', which will be a new model for the steel industry.

Nippon Steel successfully developed a new type of tin-containing stainless steel. Japan's Nippon Steel & Sumikin Stainless (NSSC) announced the successful development of tin-containing low-gap ferritic stainless steel (named FW Series), becoming the first company in the world to develop such a steel. FW series steel is NSSC uses its own technology to increase the corrosion resistance of ferritic stainless steel by adding a trace amount of tin during the manufacturing process, while improving the processability of the steel. The first type of FW series '''NSCFW1''' ferritic stainless steel features high corrosion resistance, low chromium and low clearance.

Korea has developed the world's highest strength ultra-high tension rebar. South Korea's Pohang, Hyundai Steel, Dongkuk Steel, Gory Steel, Pohang Industrial Science Research Institute, Yonsei University, National University and other 17 domestic institutions jointly developed the world’s highest strength ultra-high tension rebar and bridge cables. Steel wire. The products developed this time include seismic rebars with a yield of 600 MPa, and 500 MPa ultra-high-tension rebar with 30% greater strength than normal rebar. This rebar is resistant to strong winds over 250 km/h and is very resistant to earthquakes, so it is suitable for use in steel for high-rise buildings. The tensile strength of the cable steel wire for bridges reaches 2,200 MPa, and the strength is 10% higher than that of general commodities. South Korea's Ministry of Knowledge Economy began investing 23.8 billion won in September 2004 to advance the ''''s next-generation steel project for ultra-large construction'''', and it finally gained some gains after 66 months.

Pohang will produce titanium alloy steel. In order to diversify its business and transform itself into an integrated company, POSCO began planning to produce titanium alloy steel after producing magnesium alloy steel. The titanium alloy steel produced by Pohang is Grade2, which is planned to produce 150 tons this year and will be expanded to 400 tons next year. By 2013-2014, the sales volume of this alloy was expanded to 4,000 tons, and the domestic market share was increased to 50%. In 2011, Pohang will develop Grade 1 and produce titanium plate in the second half of the year.

V. Promoting the expansion of overseas steel production capacity Despite the difficult progress of the Indian project, ArcelorMittal, Nippon Steel and Posco will not give up their overseas markets with rapid growth, especially the Indian market. Arcelor Mittal believes that India will continue to face a supply shortage of up to 33 million tons of steel in the next 10 years and the supply shortage will increase in 2015. At present, the annual output of crude steel in India is approximately 51 million tons. Based on plans for the major steel mills in India to set up factories in India and expansion plans for domestic steel mills in India, it is expected that the steel supply in India will increase to 131 million tons by 2019. The Indian steel demand will be expanded from the current 56 million tons to 150 million tons, and by 2020 the demand will further increase to 164 million tons.

Arcelor Mittal continues to promote Indian steel mill projects and is still committed to building a total of 30 million tons of steel mills in India. As previously claimed two large Indian steel projects are difficult to achieve, ArcelorMittal has changed the strategy of building a single large steel mill, turning to build smaller steel manufacturers in India to enter the Indian market in a more flexible way. The company claims that it will build three small-scale steel mills each with an annual capacity of 3 million tons in India, Jharkhand, Orissa and Karnataka. Steel mills in Jharkhand and Karnataka are likely to be put into operation in 2015, and the production of the Orissa state steel plant will be delayed by one year than the two steel mills, which will be put into production in 2016. In addition, ArcelorMittal has also established joint ventures with local steel company uttam galvanized steel companies to accelerate the pace of entering the Indian market. In addition, the company also entered into the competition for high-end steel plate market in China through the joint venture project with Valin Steel and the steel sheet pile cooperation with China Eastern.

The appreciation of the yen has accelerated the pace of Nippon Steel’s overseas expansion. The company plans to increase the annual crude steel production capacity from the current 40 million tons to 50-60 million tons in the next few years. Most of the increase in production capacity will come from overseas markets, mainly in Asia, China, India and Mexico, Latin America and other regions to change production. At present, this situation is mainly in Japan. The development of automotive sheet metal production, downstream processing and supply chain is still the focus of Nippon Steel's overseas investment. The market is prioritized in India, Brazil and Southeast Asia. For example, India’s Tata Steel and India’s Tata Steel Group will jointly manufacture and sell 600,000 tons of annual production capacity in India. Tensile strength automotive steel, and Latin American Ternium Steel Corporation signed an establishment in Mexico with an annual capacity of 400,000 tons of hot-dip galvanized sheet metal plants, including the construction of a blast furnace. Nippon Steel also joined forces with Japan’s three companies to take a US$60 million acquisition of a 55% stake in Indonesian galvanized sheet manufacturer Latinusa to strengthen its tinplate business in Asia. At the same time, Nippon Steel plans to build an annual capacity with Sumitomo Corporation in Vietnam. 60,000 tons of steel pipe and thin sheet piles make Vietnam an overseas construction steel production base. In addition, Nippon Steel also accelerated its expansion of the Minas Gerais Steel Company in Brazil.

POSCO Steel is active in overseas M&A expansion and aims to become an international group by entering mineral resources such as iron ore, coal and natural gas, and its heavy plate customer shipbuilding sector. Posco has spent USD 2.28 billion to acquire Daewoo International, a local energy, resource and trading group. The acquisition of Daewoo International will help POSCO to complete its expansion into emerging markets in Africa and Southeast Asia. It will benefit from Daewoo International’s overseas sales network, with approximately 65% ​​of Daewoo International's sales coming from Asia, Africa and Oceania. Daewoo International's expertise in resource development can also help Posco invest in overseas minerals. Currently, Posco is implementing a total capacity expansion plan of 30 billion U.S. dollars in emerging countries such as India and Indonesia. At least 3 greenfield integrated steel projects are being tracked, two in India and one in Indonesia. Pohang’s Indonesian integrated steel plant (with an annual capacity of 3 million tons) has now held a groundbreaking ceremony and will start production in 2013. The second-phase annual production capacity will be expanded to 6 million tons.

Severstal plans to invest $6.4 billion in global expansion in the next four years. Russia's Severstal is planning a $6.4 billion investment plan (not including maintenance fees). By 2014, 68% of the total investment will be spent on Russian projects, and 12.3% of the funds will be delivered to the United States. The United States is still the key market for the Severstal mills to expand production. Prior to the collapse of demand in 2008, Severstal took a large-scale acquisition in the United States, making its capacity in the United States ranked third in all US steel companies. Severstal’s investment in the United States is mainly concentrated in two steel mills, the Columbus plant in Mississippi and the Deraborn plant in Michigan. With financial support, the Columbus plant's second phase expansion project is scheduled to be completed in early 2012. Dearborn's investment is focused on pickling lines and tandem cold rolling mills.

Sixth, three major mining iron ore production capacity expansion speed increase Based on the good expectations of future iron ore demand, especially from emerging markets such as China's demand, Brazilian and Australian ore suppliers to accelerate the pace of investment expansion after the financial crisis.

Vale's 2011 investment budget of US$ 12.9 billion based on its investment of 12.9 billion U.S. dollars, which has doubled to 24 billion U.S. dollars, is the largest investment plan ever claimed by the mining industry. 70% of the investment budget is for local projects, mainly the expansion of iron ore capacity and the construction of new ports and logistics infrastructure, including the expansion of the Caragana iron ore, the railway linking the iron mines of Caracas, and the development of the port of Pontada Madeira. We also plan to develop new large iron ore mines at SerraSul. The projects that have been approved include: an annual capacity increase of 30 million tons in Caracas, the Conceicao Itabiritos iron ore project, the Vargem Grande Itabiritos pellet project, and the phase III expansion of Tubarang Port (the new pellet plant will be put into operation in 2012). It is estimated that by 2011, the annual production of iron ore in Vale will reach 311 million tons, and in 2014 it will further increase to 450 million tons. Vale will also focus on overseas projects in Africa, the Asia Pacific region, etc. Fertilizer and nickel will also be key projects for its investment expansion.

BHP Billiton's '''Rapid Growth Plan 4 (RGP4)'''' will be completed by the end of 2010 and its annual production capacity will increase from 129 million tons to 155 million tons. The current "'''rapid growth plan 5'''' has also been launched, Yandi Mine - Port Hedland will double its transportation capacity to support an annual production capacity of more than 350 million tons. Its RGP1 ​​was completed in 2004 and 100 million tons was increased to 110 million tons. RGP2 was completed in 2006 and RGP3 was completed at the end of 2007. In addition, BHP Billiton has invested heavily in the overall development of the iron ore-rich veins in West Africa, making West Africa a new iron ore supply center after Australia. BHP Billiton will provide a total investment of about 3 billion U.S. dollars to Liberia, and plans to invest 2 billion U.S. dollars in Guinea, another West African country neighboring Liberia, for mining as an underground ore.

Rio Tinto has full confidence in investing in expansion of production capacity, and investment has now returned to levels before the global financial crisis. Since July 2010, the Pilbara iron ore capacity expansion investment has reached 7.2 billion U.S. dollars. It is estimated that the investment will increase by another 50% in 2011 to reach 13 billion U.S. dollars. It is mainly used in iron ore and aluminum, alumina, copper and nickel. Other non-ferrous metals. Rio Tinto is accelerating the expansion of its iron ore production capacity in the Pilbara region of Western Australia. The investment in the Pilbara expansion approved since July this year has risen to US$7.2 billion. By the end of 2011, investment will increase by another 50% to approximately 13 billion U.S. dollars. The U.S. dollar will need to invest 14.8 billion U.S. dollars in the next five years and about 130 U.S. dollars in tons of mines. Due to rising environmental costs in the mining industry and the appreciation of the Australian dollar, Rio Tinto’s investment costs have climbed. At present, Rio Tinto owns a total of 220 million tons of mines in its wholly or jointly owned Pilbara. After the completion of the Pilbara capacity expansion in 2015, the annual capacity of Rio Tinto's iron ore will increase by 50% to 333 million tons. The expansion will be carried out in phases, with annual production capacity increasing to 225 million tons in the first quarter of 2011 (increasing the efficiency of the system in the Dampier port); 230 million tons in the first quarter of 2012 (during the expansion of the Dampier port capacity); reaching 2.83 by the second half of 2013 Billion tons (Lambertt's Phase I expansion capacity reaches 53 million tons); in the second half of 2015, Rio Tinto's annual production capacity will reach 333 million tons (Lambertt's Phase II expansion capacity is 50 million tons, and feasibility studies are under way. ). In addition, Rio Tinto’s development of Liberia and Guinea’s Simandou Iron Project is also underway.