The two new mines being planned, at a total cost of $2.42 billion, are scheduled to begin production in 2010. Sam Walsh, chief executive of Rio Tinto Iron Ore, said the new mines were integral to the Pilbara production platform underpinning Rio Tinto’s rapid expansion of its global network of assets. “Brockman 4 will bring on a new, high-volume longlife source of Brockman ore, a key component of the Pilbara Blend product successfully introduced to the market in July this year. Likewise, our Robe Valley pisolite product has consistently proved to be competitively attractive for our customers.”

The Mesa A/Warramboo mine, about 50 km from Pannawonica, will have an initial production of 20 million mt/y, increasing to 25 million mt/y by 2011.

The mine will sustain production of Robe Valley pisolite ore at 32 million mt/y over the next decade. Current production from the Mesa J deposit, now nearing the end of its mine life, will reduce to 7 million mt/y with Mesa A providing the balance. A 49-km rail extension will connect the new mine to the Rio Tinto rail network. The project capital cost is estimated at $901 million (Rio Tinto’s share would be $478 million).

Total high-grade reserves across the Mesa A/Warramboo deposits are estimated at 249 million mt, with a total mine life of 11 years.

The first phase of the Brockman 4 development, about 60 km northwest of Tom Price, will have an annual output of 22 million mt/y with a potential for further expansion. Brockman 4, according to the company, is well positioned to serve as a hub for the future development of nearby deposits. The project has an estimated total capital cost of more than $1.52 billion. Design considerations allowing for an increase in output by 14 million mt, to 36 million mt/y, are included in the Phase I scope, which will facilitate a cost effective ramp up as additional port capacity is brought on line.

Phase I will take two years to construct and commission with production ramp-up planned to begin in early 2010, and full capacity to be reached by 2012. The mine will be connected to the Pilbara Iron Rail network by a 35-km rail spur to the Brockman 2/Nammuldi operations. The Brockman 4 orebody contains 573 million mt of high-grade reserves (>60% iron). A further 597 million mt of blending and lower-grade (50%-60% Fe) resource will be stockpiled for future processing.

The Hope Downs Joint Venture (managed by Rio Tinto) has approved a feasibility study to expand the Hope Downs 4 project as part of the Rio Tinto program to reach annual capacity of 320 million mt of iron ore by 2012 at its Pilbara operations.

The study, which will cost an estimated $71 million, will assess the deposit as an extension of the existing Hope Downs Joint Venture (50:50 owned by Rio Tinto and Hope Downs Iron Ore Pty Ltd.). The study will incorporate the recently completed 50,000-m infill drilling program at Hope Downs 4.

The Hope Downs 4 deposit is located 35 km northwest of the town of Newman and 45 km east of the Hope Downs 1 mine. This mine began production in November 2007 and is expected to reach 30 million mt/y capacity in early 2009. Rio Tinto said the proximity of Hope Downs 4 to other deposits which it fully or partly owns promises significant potential synergies and option value for Rio Tinto Iron Ore.

The Hope Downs 4 deposit consists of three main areas of mineralization of approximately equal size extending over a length of 8 km. The deposit has been reestimated after completion of an 18,000 m in-fill drilling program in 2006. The contained high grade resource (>=60% Fe) is made up of 98.6 million mt grading 62.3% Fe of indicated mineral resource and 206.1 million mt at 62.4% Fe of inferred mineral resource. Necessary government and environmental approvals would be required before development of a Hope Downs 4 mine could proceed.

Rio Tinto also revealed a 3-billion-mt addition to its iron ore resource base in the Pilbara district which, according to the company, came about through discovery of a major new resource at Caliwingina, as well as what it termed “significant improvement in confidence” of resources associated with known deposits.

In announcing the resource enhancement, Walsh asserted that “Rio Tinto occupies the largest mineralization and land position in the Pilbara. This advantage is strengthened by addition of the newly discovered resource at Caliwingina, comprising 875 million tons of iron ore only 15 km from our railway and only 150 km from our ports at Dampier and Cape Lambert, as well as significant additions around known deposits.”

The newly discovered Caliwingina resource is within the Mt. Pyrton project area which lies 100 km north northwest of Tom Price and is approximately 15 km from the Rio Tinto Iron Ore Tom Price to Dampier railway line.

Rio Tinto initially conducted exploration for Channel Iron Deposit (CID) in the southern part of Caliwingina using geophysical techniques and an extensive reverse circulation (RC) drilling program during 2002–2003 which delineated a 6-km continuous length of CID. During 2005–2006 Rio Tinto continued an RC drilling program to the north following the CID channel to the out wash area in the Fortescue Valley.

According to the company, the Caliwingina North area now has sufficient drilling coverage (173 RC holes for 11,503 m on a nominal 500 x 200- m grid spacing) to define an Inferred CID Mineral Resource. Drill evaluation work will continue in the Caliwingina Prospect during 2008–2009 to update the resource base. Also diamond drilling will be conducted to improve grade estimation confidence as well as for metallurgical and density test-work. Drill evaluation work will continue in the Caliwingina Prospect during 2008– 2009 to update the resource base. Also diamond drilling will be conducted to improve grade estimation confidence as well as for Metallurgical and density test work.

Rio Tinto also announced that it intends to purchase three 250,000 deadweight mt ore carriers to transport iron ore from its mines in the Pilbara (and potentially from Simandou in Guinea) to customers in China and elsewhere. It also has reserved rights on another two vessels of similar size. The vessels, to be built by Namura Shipyards in Japan and delivered from late 2012, will cost about $315 million in total. China’s iron ore imports have grown substantially in recent years and are forecast to continue to grow strongly with the potential to more than double post 2010. To maintain and increase its share of this growth, Rio Tinto Iron Ore is expanding the capacity of its Pilbara iron ore operations to 220 million mt by 2009, supported by long term contracts, hybrid contracts and spot sales.

During its investor seminar on November 26, 2007, Rio Tinto said its growth strategy in iron ore and a strong pricing outlook would allow it to build a conceptual pathway to triple production to over 600 million mt/y of iron ore from Australia and Guinea.

David Peever, managing director of Rio Tinto Marine, said, “These vessels are designed for maximum loading at Rio Tinto’s iron ore ports. The acquisition of these vessels, and the related options, provides us with maximum flexibility in developing our future marine strategy.”

Peever said that Rio TInto, through its Marine division, manages a freight portfolio with a strong focus on longterm, low-cost freight positions. “During 2008, we will be considering commercial options and partnerships to further leverage our freight business.”