Rio Tinto has doubled its holding in Richards Bay Minerals (RBM) following the completion of its acquisition of BHP Billiton’s entire interests. The purchase price paid by Rio Tinto on completion was $1.7 billion.

The acquisition price was $1.9 billion before contractual adjustments for cash payments made by RBM to BHP Billiton since the effective transaction date of February 1, 2012. This price includes $600 million for BHP Billiton’s 37% equity interest in RBM, $1 billion for a 50% interest in outstanding RBM shareholder financing arrangements, and $300 million for a royalty stream.

“Doubling our stake in this tier one asset further strengthens Rio Tinto’s titanium dioxide portfolio at a time when the long-term outlook remains robust,” said Rio Tinto Diamonds & Minerals Chief Executive Alan Davies. “Demand for feedstock is expected to grow strongly, needing the equivalent of a new operation the size of RBM to be built every two and a half years.”

RBM is a South African mineral sands mining and processing operation located in Kwa-Zulu Natal. It is one of the world’s lowest cost producers and has mineral resources to support 20 years of production.

Rio Tinto manages the RBM business and markets all of its products. In 2011, RBM produced 14% of global titanium dioxide feedstock sales and 18% of global zircon sales. RBM’s revenues for 2011 were $1.2 billion, with 41% generated from the sale of feedstock. Rio Tinto continues to replace legacy titanium dioxide feedstock contracts, increasing exposure to more favorable market prices.

The remaining 26% of RBM is owned by a consortium of local communities and businesses (24%) and RBM employees (2%), in line with South Africa’s Broad-based Black Economic Empowerment legislation.