Rio Tinto invests US$2.4 billion in two new iron ore mines in the Pilbara

26 November 2007

Rio Tinto has announced a further significant investment in its iron ore export capacity in the Pilbara region of Western Australia, with the approval of the new Mesa A/Warramboo mine in the Robe Valley and Brockman 4 mine near Tom Price.

The combined investment of US$2.42 billion (nominal terms, 100 per cent basis) in the two mines will ensure that Rio Tinto's leadership of the Pilbara matches its unparalleled global position in the iron ore industry. The mines will begin production in 2010.

Sam Walsh, Chief Executive Rio Tinto Iron Ore, said the new mines were integral to the Pilbara production platform underpinning Rio Tinto's rapid expansion of its global network of assets.

"Mesa A/Warramboo and Brockman 4 demonstrate our strategy of substantial investment in high-quality, long-life, low-cost assets. They are outstanding deposits, close to existing infrastructure, and each promises excellent commercial returns," he said.

"Brockman 4 will bring on a new, high-volume long-life source of Brockman ore, a key component of the Pilbara Blend product successfully introduced to the market in July this year. Likewise, our Robe Valley pisolite product has consistently proved to be competitively attractive for our customers."
Mesa A/Warramboo

The Mesa A/Warramboo mine, about 50 kilometres from Pannawonica, will have an initial production of 20 Mtpa, increasing to 25Mtpa by 2011.

The mine will sustain production of Robe Valley pisolite ore at 32Mtpa over the next decade. Current production from the Mesa J deposit, now nearing the end of its mine life, will reduce to 7Mtpa with Mesa A providing the balance. A 49-kilometre rail extension will connect the new mine to the Rio Tinto rail network.

The project capital cost is estimated at US$901 million (Rio Tinto share US$478 million).

Total high-grade reserves across the Mesa A / Warramboo deposits are estimated at 249Mt, with a total mine life of 11 years.

Brockman 4

The first phase of the Brockman 4 development, about 60 kilometres northwest of Tom Price, will have an annual output of 22 Mtpa with a potential for further expansion. Brockman 4 is well positioned to serve as a hub for the future development of nearby deposits. The project has an estimated total capital cost of US$1,521 million. Design considerations allowing for an increase in output by 14Mtpa, to 36Mtpa, are included in the Phase I scope, which will facilitate a cost effective ramp up as additional port capacity is brought on line.

Phase I will take two years to construct and commission with production ramp-up planned to begin in early 2010, and full capacity to be reached by 2012. The mine will be connected to the Pilbara Iron Rail network by a 35 kilometre rail spur to the Brockman 2/Nammuldi operations.

The Brockman 4 orebody contains 573Mt of high-grade reserves (>60 percent iron). A further 597 Mt of blending and lower-grade (50-60 percent Fe) resource will be stockpiled for future processing.

Both expansions are subject to Government approvals.

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