Driverless trucks to drive Rio Tinto’s profits


Mining giant Rio Tinto Limited (ASX: RIO) announced that it will become the owner of the world’s largest fleet of driverless trucks.

The company already has a handful of such vehicles in operation, but has signed a deal with Japanese firm Komatsu to buy at least 150 Autonomous Haulage System trucks over the next four years.

Mines of the future
The deal with Komatsu is part of Rio Tinto’s ‘Mine of the Future’ programme, which aims to increase productivity, reduce costs, and improve health, safety and environmental performance.

The trucks will be used in Rio’s iron ore mines in the remote Pilbara region of Western Australia. Packages to draw mine workers to the region — attractive salaries, food and accommodation, and weekly return flights home — have contributed to a 40% rise in operating costs in the past five years.

The new driverless trucks will be remotely-controlled from Rio’s operations centre at Perth — almost 1,000 miles from the mines.

Rio isn’t the only miner looking to slash costs in the Pilbara region. Fortesque Metals Group (ASX: FMG) has recently announced that Caterpillar (NYSE: CAT) will supply it with 12 driverless trucks by the end of the year, and is aiming to increase the fleet to 45 by 2015.

Meanwhile, in the neighbouring state of South Australia, the world’s largest miner, BHP Billiton Limited (ASX: BHP), is reportedly planning to run automated haulage trucks 24/7 for five to six years in the $30 billion expansion of its Olympic Dam mine.

Good for shareholders
Driverless vehicles have come a long way since the US Defense Advanced Research Projects Agency inaugurated an annual automated vehicle challenge in 2003.

In 2005, only five of 23 prototype vehicles completed a 132-mile course in the desert. Technology has advanced so rapidly as to prove the viability of driving through an urban area without a driver.

Demand for driverless vehicles should be good news for shareholders of manufacturers and suppliers, such as Komatsu, Caterpillar, and Oshkosh, whose TerraMax military truck was developed to meet the US Congress goal of having one in three ground combat vehicles self-driving by 2015.

Shareholders in the big miners, such as BHP Billiton and Rio Tinto, should also be beneficiaries from the increased production and margins that driverless trucks will deliver.

Rio’s announcement today signals a 15-fold expansion of its automated fleet from its previous plan to double the number of trucks from five to ten. That’s a significant acceleration of the rollout, and the Mine of the Future could be closer than analysts had hitherto been anticipating.

If you are looking for investing ideas, request our free report, The Motley Fool’s Top Stock For 2011-12. Click here, whilst it’s still free and available.

This article, written by G A Chester, was originally published on Fool.co.uk. It has been updated. Authorised by Bruce Jackson.

OUR #1 DIVIDEND PICK FOR 2016...

Forget BHP and Woolworths. This "dirt cheap" company is growing like gangbusters, and trading on a 5.6% dividend yield, FULLY FRANKED (8% gross). With interest rates set to stay at these low levels for years to come, for hungry investors, including SMSFs, this ASX company could be the "holy grail" of dividend plays for 2016.

Enter your email below to discover the name, code and a full investment analysis in our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2016.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.