Rio tinto said on Thursday that costs would rise as it replaced ageing infrastructure and boosted iron ore production, casting a shadow over the future of its Australian aluminium business.

Rio tinto could become the world's largest iron ore producer this year. The company was plagued by weather and operational problems in the first quarter, leading it to cut its annual earnings forecast.

The company also signaled rising costs on Thursday, briefing investors on spending to upgrade and replace older plants.

In a statement, Rio said capital expenditure would increase by $1 billion to $1.5 billion a year from 2020, compared with an earlier estimate of about $1 billion.

The company also said it would defer capital spending of $500 million in 2019 until next year. The global miner said total capital expenditure was expected to be about $5.5bn in 2019 and $7bn in 2020. The report sets the 2021 and 2022 budgets at $6.5 billion.

"We are getting to a point where... We have a generation of assets that need updating, "Chris Salisbury, iron ore director, told an investor briefing.

"I don't think spending increases are permanent. It's periodic. We will continue to update our spending budget.

The company's assets include a concentrator at the Tom Price iron ore mine in western Australia and the replacement of some of its existing truck fleet, he said.

The miner is expanding its new Koodaideri mine in western Australia in the hope of meeting its long-term goal of 360m tonnes of iron ore a year.

Salisbury said that pace had been expected by the end of the year, but a series of operational bottlenecks and other problems meant that a change in that step would have to wait until new mine production increased in 2022.

Rio tinto expects iron ore shipments to grow 5% in 2020, depending on market conditions.

Rio tinto said the current power situation for its Australian aluminium assets was unsustainable because prices were too high. The company is also evaluating its New Zealand smelter.

"Smelter prices are really lagging behind international competitive prices, which is making aluminium less viable," Alf Barrios, head of the aluminium plant, said on an earlier media conference call.