Rio Tinto's review of its Pilbara expansion projects has resulted in the termination of a $25 million accommodation construction contract with East Perth-based Fleetwood Corporation.
Rio Tinto's review of its Pilbara expansion projects has resulted in the termination of a $25 million accommodation construction contract with East Perth-based Fleetwood Corporation.
In a brief statement issued by Fleetwood, the company said Rio has cancelled a $25 million contract for the manufacture of 250 accommodation units.
The units were scheduled to be delivered between November 2008 and April 2009.
"The decision to terminate the contract follows a review by Rio Tinto of its capital projects," Fleetwood said.
The accommodation provider added the cancellation of the contract is not expected to have a significant impact on its group earnings for fiscal 2009.
Rio slashed its Pilbara iron ore production last month, reversing plans to expand output of the bulk commodity from the region to 320 million tonnes per annum by 2012 at a cost of about $US10 billion ($A15.44 billion).
The mining giant expects to ship between 170 million and 175 million tonnes of iron ore from the Pilbara in 2008, down 10 per cent on its previous estimate, in response to slowing demand by Chinese steel mills.
Rio Tinto's Iron Ore Company of Canada is also curbing production its operations in Labrador and Quebec.
The contract termination follows a similar move by Fortescue Metals Group last week, which instructed NRW Holdings to defer works on the Cloudbreak rail line, which was 47 per cent complete.
FMG also revised its shipping tonnage rate to between 15-16 million tonnes for the 2008 calendar year.
Meantime, Rio Tinto is likely reduce output at some of its iron ore mines or place them on care and maintenance over the Christmas New Year period, in response to slowing demand from Chinese steel mills.
The mining giant was considering "trimming operations" at some of its iron ore mines as part of its recently announced 10 per cent reduction in exports from the Pilbara region in 2008, a Rio Tinto spokesman said.
The spokesman said the slowdown would occur between December 22 and January 2.
"We have sought the assistance, and received it, of our workforce to, wherever possible, take leave over that two-week period," the spokesman said.
"That is consistent with our previously announced cut to production of what amounted to 10 per cent on an annualised basis for the calendar year.
"It is also consistent with previous years' practice.
"We will make a decision closer to the time about what sites and services would remain operating and at what level," the spokesman said.
"Essentially we would be looking to trim our operations in line with the reduced production and reduced shipping that was previously announced."
The spokesman said Rio Tinto continued to undertake rail and port studies for its planned expansion to 220 million tonnes of iron ore per a year from the Pilbara.
He said Rio Tinto would decide early next week whether to expand to this level.
Rio Tinto shares were down $3.90 to $42.70 while Fleetwood's shares fell 15 cents to $4.00
