Rio Tinto Expanding Australian Port Export Capacity

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Environmental Protection Authority (EPA) of Western Australia has granted conditional approval to the expansion plans of diversified mining company Rio Tinto Limited (ASX:RIO) (Melbourne, Australia) for its Cape Lambert port facilities. The approval is subject to a two-week appeals process. Rio Tinto applied for the approval in 2007.

Rio Tinto subsidiary Pilbara Iron Pty Limited (Perth, Australia) plans to build and run a second port at Cape Lambert and expand the processing and export capacity of the port from 80 million tons per year to up to 130 million tons per year by 2013. The possibility of adding an additional 50 million tons of annual capacity is also being studied.

EPA Chairperson Paul Vogel said that if Rio Tinto satisfied certain recommended conditions while developing the second port, the company's expansion plans were unlikely to compromise the EPA's environmental objectives. The conditions include the minimizing of light, noise and dust from the area and the setting up of a buffer and conservation zone between the town of Point Samson and the port. The company also must make arrangements to protect the marine fauna and control the effect of artificial lighting on flatback turtle rookeries. The EPA has acknowledged that the new developments would not be able to avoid causing some impact on the marine fauna of the region.

In earlier announcements, Rio Tinto had said that one of the first steps that would be implemented as part of the company's proposed multibillion-dollar Pilbara iron ore expansion would be the expansion of the operating facilities at Cape Lambert. To increase the capacity of the 220 million-ton-per-year Pilbara iron ore facility to 330 million tons per year by late 2015 will require the establishment of a new terminal at Cape Lambert that can berth four capesize ships. The proposed new port and the existing Parker Point port at Dampier are expected to help Rio Tinto achieve its iron ore expansion targets. The 140 million-ton-per-year Dampier port is currently being expanded by 10 million tons per year. Work is expected to be completed by 2011. The expansion project at Cape Lambert on the Indian Ocean includes the development of railroads and new mines on the route to the port. The detailed design and engineering work of the expansion project was earlier scheduled to be completed by the end of 2010.

According to estimates, the Pilbara expansion project could cost more than $10 billion, and analysts expect the company to approve some funding by mid-year. Rio Tinto has not yet obtained funding approval, and Sam Walsh, the CEO of Rio Tinto Iron Ore, said that the company has put all new iron ore projects on hold while trying to understand the exact implications of the Australian government's proposed Resource Super Profits tax of 40%. Australian mining companies have been forced to reassess all new projects in the face of the proposed 40% levy scheduled to be implemented from 2012, subject to approval. For additional details of the how the tax is affecting Australian miners, see May 14, 2010, article - BHP Billiton to Reassess Yeelirrie Uranium Project in the Face of New 40% Tax.

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