Rio Tinto Ltd has defended its right to keep the giant Rhodes Ridge iron ore deposit, saying it is critical to its Pilbara expanion plans, while also announcing a $710 million expansion of other operations in the region.
Rio Tinto Ltd has defended its right to keep the giant Rhodes Ridge iron ore deposit, saying it is critical to its Pilbara expanion plans, while also announcing a $710 million expansion of other operations in the region.
Its comments followed a claim by junior explorer Cazaly Resources Ltd that Rio had lost its right to the Rhodes Ridge tenements.
Cazaly said today that it will seek to prove that Rio and its joint venture partners' rights of occupancy at Rhodes Ridge are invalid at a forthcoming hearing with the Department of Industry and Resources' (DoIR) Mining Warden.
Cazaly cited inactivity at Rhodes Ridge for the past 35 years. It announced today that it had teamed up with Fortescue Metals Group to potentially explore the development of Rhodes Ridge.
The announcement propelled Cazaly's share price up 115 per cent to a high of 70c before closing at 52c.
Rio Tinto referred in an announcement today to its 1972 agreement with the state government for the project, saying that Cazaly's move was "an attempt to undermine security of land tenure conferred by a Western Australian State Agreement".
"The joint venture partners are in full compliance with the terms of tenure of the State Agreement," Rio Tinto Iron Ore chief executive Sam Walsh said.
"The rights of occupancy are valid and the ground is not available for mining by third parties.
"The Rhodes Ridge project is critical to our development plans ... particularly as we move from producing 320 million tonnes a year by 2012 to 420 million tonnes per annum from our Pilbara province."
Rio also announced today it is planning a $710 million expansion of its Pilbara iron ore operations to increase output to 320Mtpa by 2012.
Rio, in conjuction with its Pilbara partners, will use the funds to acquire long-lead items, start infrastructure works and study the development a new iron ore mine near Tom Price. Rio's share of the investment is $525 million.
Rio Tinto's hostile suitor BHP Billiton Ltd is also working to expand to its iron ore production and plans to hit a rate of 300 million tonnes per annum by 2015.
While fending off the takeover attempt that it says undervalues its growth prospects, Rio Tinto has repeatedly said in recent months that it will expand its iron ore operations quicker and cheaper than its rival.
Mr Walsh said certainty of land tenure in WA was crucial to Rio Tinto's ongoing expansion.
"Certainty of land tenure in Western Australia is fundamental to ... investment, which is what the state agreement provides for in this case," Mr Walsh said.
"Right now, we have drill rigs working at Rhodes Ridge deposits, in preparation for future operations."
Rio Tinto said the tenure of the state agreement was extended to December 31 early this year.
"These facts are beyond question," Mr Walsh said.
The Rio Tinto-managed Rhodes Range project is east of Rio Tinto's West Angelas operations and south of Hope Downs, a joint venture with Gina Reinhart's Hancock Prospecting Pty Ltd.
The Rhodes Range joint-venture partners are Hancock Prospecting Pty Ltd, Hamersley Resources Ltd and Wright Prospecting Pty Ltd.
The project is estimated to contain at least two billion tonnes of high-grade hematite and is recognised as one of the largest undeveloped iron ore resources in WA.
