Rio Tinto iron ore sales arra

RNS Number : 7684Z

Rio Tinto PLC

24 July 2008

 



Rio Tinto's innovative mine-gate iron ore sales arrangement with Iron Ore Holdings for a new Pilbara mine

24 July 2008

Rio Tinto, through its Hamersley Iron subsidiary, and Iron Ore Holdings Limited (ASX: IOH) agreed today on commercial terms for an innovative mine-gate sales arrangement. Under the arrangement, Rio Tinto would purchase iron ore from a new IOH mine at Phil's Creek, 90 kilometres from Newman.  

Once the feasibility of developing the Phil's Creek deposit is proven, the mine would be owned and operated by IOH, and Rio Tinto would purchase the supplied iron ore and transport it for sale to its customers. IOH would deliver the ore to the Yandicoogina stockyard, where Rio Tinto would assume ownership. The mine would produce an estimated one to 1.5 million tonnes a year. 

Rio Tinto Iron Ore chief executive Sam Walsh said the agreement was an innovative solution that suited both parties. 

'This commercial agreement represents an excellent opportunity for Rio Tinto to gain access to extra tonnage, and importantly, in a way that does not jeopardise the efficiency of our fully integrated production system.'

'It also enables IOH to develop a small resource that would face large capital costs on a stand-alone basis and most likely remain undeveloped,' he said

Mr Walsh said: 'The output from this proposed mine is less than one per cent of our total Pilbara production. With our exponential growth from 220 to 320 million tonnes per year and beyond, and infrastructure expansions possibly preceding mine supply, we can stockpile the ore to capitalise on rail and shipping opportunities as they arise.'

'Importantly, it demonstrates our preferred alternative to the growing demands from Government and industry for access to our rail infrastructure. The agreement is commercially-based and balances the risks for both parties,' Mr Walsh said.

The Phil's Creek deposit comprises 8.3 million tonnes of Indicated Mineral Resources grading 58.1%Fe, which IOH has reported in accordance with the 2004 JORC code.1 The deposit is pisolite ore situated only five kilometres from Rio Tinto's Yandicoogina mine, the largest iron ore mine in Australia. 

The proposal requires the approval of the Western Australian Government. 

1Source: IOH Quarterly Activities Report, 30 April 2007.

 About Rio Tinto 

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.

Forward-Looking Statements    

This announcement includes 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Rio Tinto's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to Rio Tinto's products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 

Such forward-looking statements are based on numerous assumptions regarding Rio Tinto's present and future business strategies and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the 'SEC') or Form 6-Ks furnished to the SEC. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Rio Tinto expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the 'Takeover Code'), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority and the Listing Rules of the Australian Securities Exchange) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Rio Tinto's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 For further information, please contact:

Media Relations, London  Christina Mills Office: [phone] Mobile: [phone] Nick Cobban Office: [phone] Mobile: [phone]	Media Relations, Australia  Amanda Buckley Office: [phone] Mobile: [phone] Leith Paganoni Office: [phone] Mobile: [phone]
Media Relations, Americas  Nancy Ives Mobile: [phone]
Investor Relations, London Nigel Jones Office: [phone]  Mobile: [phone] David Ovington Office: [phone] Mobile: [phone]	Investor Relations, Australia Dave Skinner Office: [phone] Mobile: [phone] Simon Ellinor Office: [phone] Mobile: [phone] Investor Relations, North America Jason Combes Office: [phone] Mobile: [phone]

 

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