IR woes hit HIsmelt

Resources giant Rio Tinto has blamed industrial relations problems for delays in the start-up of its innovative HIsmelt pig iron plant at Kwinana.

The HIsmelt setback was one of the few items of bad news reported by Rio in its annual results announcement last week.

Its earnings, which have benefited from higher commodity prices and increased production, included a net loss of $ US 11 million ($A14 million) for HIsmelt “due to pre-production marketing and administration costs”.

In the previous year, HIsmelt incurred a loss of $US2 million.

Rio added that the start-up of the $US200 million plant has been deferred from the second half of 2004 to the first half of 2005. It said this was “a result of various contractor labour disputes”.

It is understood there has been a succession of small stoppages, in some cases due to workers downing tools because of temperature readings inland at Mt Lawley.

The delays have frustrated efforts to complete construction of the plant, which Rio said was 99 per cent complete.

The HIsmelt plant involves a revolutionary new direct iron smelting technology.

It is majority owned by Rio in partnership with US steelmaker Nucor, Japan’s Mitsubishi Corporation and Chinese steel-maker Shougang Corporation.

Rio has already recruited the operational workforce for the HIsmelt plant, which has been on board for nearly a year getting ready for the production start-up.

In other WA news, Rio said expansion projects currently under way in its Pilbara iron ore business were proceeding on schedule. Rio said its operating costs were affected by higher prices for skilled labour, steel, rubber, diesel, explosives and freight.