Rio Tinto was looking at a number of possible acquisitions in the “low-single-digit billion” price range, the miner said on Friday, as booming sales of iron ore continued to erase recent memories of indebtedness and forced asset sales.

Rio, riding a China-generated wave of high industrial metals prices, expects to spend about $11bn (£7bn) on building and expanding mines in 2011, up from about $4bn this year. Annual capital expenditure is likely to remain “at a comparable level” to $11bn during the next few years.

Its network of iron ore mines in Australia’s Pilbara region, the company’s crown jewel assets, is entering a phase of accelerated expansion, with Rio forecasting 283m tonnes of production capacity by 2013, which puts it on course to reach its goal of 333m tonnes by 2015.

Rio generated 70 per cent of its net profits from iron ore in the first half of the year. Asked to comment on market talk that Rio has become an iron ore company, Tom Albanese, chief executive, said: “I would say we are the best diversified mining company which is currently enjoying very strong prices for iron ore.”

He added: “We do recognise that there will be a price reversion [in iron ore prices]”, noting that today’s intensity of Chinese steel consumption will not continue forever. “Anyone who thinks $100 per tonne is a long-term price is wildly bullish,” he said, as prices continued to hover around $150 per tonne.

Rio’s investments were aimed at expanding an Australian iron ore business that would be profitable in almost any market, he added.

Rio, stating that the copper market is likely to be tight until 2020, has also earmarked more than $2bn to invest in copper assets during the next three years.

Guy Elliott, finance director, confirmed that Rio was on the hunt for acquisitions as it finished a year defined by asset disposals.

“We are looking strongly at M&A,” he said, but scoffed at the notion of a target “anywhere near” the size of Alcan, its ill-fated $40bn aluminium buy. “We are not looking at huge acquisitions. I would say they are in the low-single-digit billions. But we do see some things out there. What we pursue will be businesses that have synergies with ones we already own.”

Rio’s move to boost 2011 capital expenditure is in line with peers like Xstrata. The big diversified miners are enjoying delayed effects from chronic underinvestment in mines during the 1990s and early part of this decade, which led to shortages. Especially in copper, this legacy is intersecting with strong demand from China and the rest of Asia.

Mr Albanese said the acceleration of spending in Pilbara was entirely unrelated to the recent failure of a deal with arch-rival BHP Billiton, which would have seen the two companies’ Australian iron ore assets combined in a 50-50 operational joint venture.

After that deal was blocked by competition regulators BHP unveiled a major expansion of its own Pilbara iron ore mines.

Rio’s new $11bn capital expenditure plan is almost three times the amount earmarked for 2010. But some spending planned for 2010 has been carried over into 2011, making the rise closer to a doubling in spending.

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