Rio Tinto to build Hope Downs iron mine in Australia

Vancouver — Rio Tinto (RTP-N, RIO-L) is beginning mine construction at its massive Hope Downs iron ore project in the Pilbara region of Western Australia.

Following state government approvals, the major and joint-venture partner Hancock Prospecting are now proceeding with the US$1-billion development. Initial capital costs for the mine are expected to be about US$590 million. Rio Tinto is committing an additional US$390 million for the cost of a 58-km rail line, rolling stock, and power infrastructure.

Main reserves at Hope Downs are hosted in the Marra Mamba iron formation (the Hope Downs 1 deposit) with 346 million proven and probable tonnes averaging 61.6% iron. Additional measured, indicated and inferred resources of 644 million tonnes grading 61.3% iron have also been reviewed in the Marra Mamba and Brockman formations, and in detrital orebodies. The 50/50 joint venture contains six iron ore deposits. Mineralization is primarily comprised of goethite and hematite.

Planned open-pit operations at Hope Downs 1 will have initial annual capacity of 22 million tonnes of iron ore and is expected to begin production in early 2008. A second-phase plan involves boosting output to 30 million tonnes annually by year four. The project has an estimated mine life of at least 20 years.

Rio Tinto, through subsidiary Hamersley Iron, already holds a number of large iron ore mines in the area, including Mount Tom Price, Channar, Paraburdoo, Marandoo, Brockman and the Yandicoogina operations, with a combined annual production capacity of over 70 million tonnes. It also owns a large loading port at Dampier, currently undergoing expansion, and rail infrastructure in the region. Rio recently built its West Angelas mine, adjacent to Hope Downs, and will be able to leverage certain infrastructure and supply contracts to expedite development.

Rio Tinto also recently formalized a joint venture with Norilsk Nickel (NILSY-O, MNOD-L) creating RioNor Exploration, an exploration and development company owned 51% by the Russian nickel producer and 49% by RTZ.

RioNor will initially focus its exploration efforts in the southern regions of the Siberian and Far-Eastern districts of Russia.

Norilsk is the world’s largest producer of nickel and palladium. Mining at its namesake Norilsk Igneous Complex in northern Siberia also produces significant amounts of platinum, copper and cobalt.