Rio Tinto's Joint Venture Iron Ore Mine in Western Australia Begins Production

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Researched by Industrial Info Resources (Sugar Land, Texas)--The $901 million Mesa A-Warramboo iron ore mine, located in the Robe River district in the Pilbara region of Western Australia and headed by Rio Tinto plc (NYSE:RTP) (London, England), has started production, Rio Tinto recently announced.

Construction of the joint venture mine, in which Rio Tinto holds a 53% stake, started in November 2007. Annual production from the existing Mesa J deposit is expected to fall to 7 million tons as the mine reaches the end of its existing life. The Mesa A-Warramboo mine was planned to sustain the production of about 32 million tons per year of ore from the area.

Initial production from the newly launched open-cut mine is expected to start at 20 million tons per year, rising to 25 million tons by next year and continuing at this rate for the expected 11-year production period. The reserves at the Mesa A-Warramboo deposit are estimated to be 249 million tons of high-grade pisolite ore.

Pisolite ore (spheroidal crystalline) is derived from natural erosion of banded iron ore deposits that are deposited in alluvial channels, leading to the often-used description of "channel iron deposit" ore. A specially built 49-kilometer rail line connecting the mine to Rio Tinto's Deepdale rail line transports ore from the mine, which is situated west of Pannawonica. This line runs from Pannawonica to the port at Cape Lambert, near Karratha.

The first train, consisting of 163 wagons filled with ore, left the mine on February 19. In keeping with the wishes of the traditional Aboriginal owners of the mine site, a local Aboriginal driver, Shane Edwards, drove the train.

Iron ore from the joint venture operations at Pilbara is largely destined for steelmakers in Japan, Europe and Asia. According to Rio Tinto, the Robe River assets include 470 kilometers of privately owned rail lines and the deepwater port and infrastructure facilities at Cape Lambert, as well as the Mesa A-Warramboo, Mesa J, and West Angelas mines.

Rio Tinto made its first shipment of iron ore from Australia in August 1966, when 52,000 tons of ore was shipped from Dampier to Japan. Rapid growth of the iron ore business in the Pilbara region resulted in the opening of the Cape Lambert port and a second terminal at Dampier in 1972. By 1991, Rio Tinto had shipped 1 billion tons of ore from the two ports, and reached the 2 billion-ton export figure in 2003. In September last year, Rio recorded the export of the 3 billionth ton of ore from Australia, with 240,000 tons of ore leaving the Cape Lambert port bound for South Korea.

The Mesa A-Warramboo joint venture consortium, Robe River Mining Company Pty Limited (Perth, Western Australia), is made up of Rio Tinto, which holds a majority stake of 53% in the project. Other members of the consortium are Mitsui & Company Limited (NASDAQ:MITSY) (Tokyo, Japan), which holds a 33% stake in the project; Nippon Steel Corporation (TYO:5401) (Tokyo), which holds a stake of 10.5%; and Sumitomo Metal Industries Limited (OTC:SMMLY) (Osaka, Japan), which holds remaining 3.5% stake in the project.

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