Rio Tinto approves US$991 million Kestrel Mine extension

17 December 2007

Rio Tinto has announced a significant new investment in its coal production capacity in the Bowen Basin region of Queensland, Australia.

The US$991 million investment in the extension of the Kestrel Mine (nominal terms, 100 per cent basis, Rio Tinto share US$793 million) will allow Rio Tinto to capture more of the growing demand for export coal. Higher quality metallurgical coal is vital to boost steel production needed to satisfy fast growing demand driven by rapid urbanisation and rising incomes in Asian markets. The extension is subject to government approvals.

Preston Chiaro, chief executive Energy, said the Kestrel Mine extension will extend the life of the mine and increase production to an average of 5.7 million tonnes of coal a year until 2031.

"This represents a further 20 year commitment to the Bowen Basin and is a strong vote of confidence in the Asian coal market. The extension will enable us to tap into 112 million tonnes (1) of high quality hard and semi-hard coking coal and thermal coal for export."

Mr Chiaro said the Kestrel Mine extension will incorporate sustainable development in its design to improve energy efficiency and reduce water usage. It is expected to create up to 250 jobs during construction and the current operating workforce of 320 will transition to the new extension.

Rio Tinto™'s Australian-based managing director Strategy, Doug Ritchie, said, “This extension is one of a number of recent investment decisions aimed at fulfilling Rio Tinto™s unrivalled strategy and growth plans. It comes hard on the heels of the 26 November announcements to Rio Tinto’s investors on the key value drivers underpinning Rio Tinto™s growth strategy.

"Our primary objective is to create further value for our shareholders and deliver very substantial returns in the future. We are entering into an unprecedented period of demand growth and Rio Tinto is well paced to meet this demand," he said.

Investments approved in 2007 include the underground development of the Diavik Diamond Mine in Canada (US$563 million) bringing total investment in the underground mine to US$787 million, the new Mesa A/Warramboo and Brockman 4 mines in Western Australia (US$2.42 billion), the Rio Tinto Alcan acquisition completed in November 2007 (US$38.1 billion), the Hope Downs iron ore expansion to 30 million tonnes per year (US$350 million), the Yarwun alumina refinery expansion to 3.4 million tonnes per year (US$1.8 billion) and the Cape Lambert port expansion to 80 million tonnes per year (US$860 million).

(1) Please refer to previously announced ore reserves in the Rio Tinto 2006 Annual report and financial statements
Notes to editors:

Kestrel Mine Extension
The Kestrel Mine, located 51 kilometres north-east of the central Queensland town of Emerald, currently produces about four million tonnes of high volatile coking and thermal coal per year for the export market, using the longwall mining method.

First longwall coal from the Kestrel Mine extension is expected in 2012, when the existing mine starts ramping down. The extension will require a new automated run of mine stockpile system and a seven kilometre overland conveyor to the existing coal handling and preparation plant.

A 375 metre wide longwall will replace the existing 250 metre wide longwall. This new longwall will achieve a substantially lower unit cost for mining and increased productivity. A new workshop, warehouse, storage facilities and administration building will be constructed, however many of the existing Kestrel Mine facilities will continue to be used.

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