Rio Tinto announces US$475 million first phase expansion to increase IOC capacity by 50 per cent

11 March 2008

Rio Tinto has announced the approval of a US$475 million project to increase the Iron Ore Company of Canada’s (IOC) annual production of iron ore concentrate to 22 million tonnes. The investment is the first phase of an IOC expansion program that may see production capability increase 50 per cent by 2011.

Work will commence immediately to expand IOC’s mining and processing facilities in Labrador West and increase transportation capacity on its 418 kilometre railway to its port facilities in Sept-Îles, Québec. The investment includes the purchase of new mining equipment as well as installation of a new crusher station in the mine and autogenous grinding mill in the concentrator and a six kilometre overland conveyor to link them together. New locomotives and rail cars will be purchased to increase railway capacity.

The remainder of the expansion program is currently in feasibility studies and a decision will be made later this year on plans to increase annual concentrate production further to more than 25 million tonnes, including an increase in pellet production to 14.5 million tonnes.

IOC chairman and Rio Tinto Iron Ore chief executive Mr Sam Walsh said the decision highlighted not only the value of Rio Tinto’s global platform of iron ore production, but also the level of confidence in market conditions over the longer term.

“The iron ore market is as tight as it has ever been and our sustained and substantial reinvestment in our operations in Canada and worldwide demonstrates the confidence we have in that market. The IOC expansion program emphasises the Group’s ability to increase supply from an existing strong base on several continents,” Mr Walsh said.

Mr. Terence F. Bowles, president and CEO of IOC, said the expansion will provide substantial employment and community growth in the Labrador West region. IOC’s 1,900-strong workforce, one of the largest in the Newfoundland and Labrador industrial sector, will grow by 200 with this expansion. Construction jobs are expected to peak at 250 over the next three years. In addition to economic benefits from growth in tax revenues and local commerce, Labrador West will benefit from improvements in infrastructure, transportation, recreation and social services.

“This investment secures the long-term future of our operations and improves the livelihoods of those around us,” said Mr. Bowles, speaking at a news conference broadcast on-line from St. John’s, the capital city of Newfoundland and Labrador. “IOC has been the main driver of the Labrador West economy for more than 50 years, and this expansion programme ensures that a new generation of families in the region can be confident that there will be rewarding careers for years to come,” he added.

“This major expansion reflects the current strong market conditions as well as the confidence of our shareholders in our ability to deliver,” added Mr. Bowles. The investment is one of many being made in Canada by IOC’s major shareholder and operator, Rio Tinto, which has activities in more than 40 countries worldwide. This includes mining developments and acquisitions in British Columbia, Northwest Territories and Quebec.

IOC’s commitment to sustainable development is fully reflected in its expansion program. The company is working very closely with local community stakeholders in Labrador City and Sept-Îles to optimize economic and social impacts and to protect the natural environment. Community consultations are well underway to ensure that this expansion proceeds in the best interests of the communities and IOC.

About Iron Ore Company of Canada

IOC is Canada’s largest iron ore producer, with iron ore being one of Canada’s most important mineral products in terms of both tonnage and value. IOC is known globally for the high quality of its products, which are often used in blends by steelmakers to improve quality and meet specifications to improve quality and productivity and reduce greenhouse gas emissions. Its broad product range is sold globally to all segments of steel industry including the high growth direct-reduction sector. IOC had approximately 416 million tonnes of iron ore reserves and 1.37 billion tonnes of iron ore resources as at 2006* and it continues to have significant resources and exploration potential.

Rio Tinto is the major shareholder and operator of IOC (58.72 per cent), along with Mitsubishi Corporation (26.18 per cent), and Labrador Iron Ore Royalty Income Fund (15.10 per cent). Rio Tinto is a leading international mining group headquartered in the UK, whose focus is finding, mining, and processing mineral resources. Rio Tinto Iron Ore is headquartered in Perth, Western Australia.

(* Source: Rio Tinto Annual Report 2006)

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