Rio Looks To Raise Weipa Output

Sydney Morning Herald

Wednesday June 18, 2008

Barry FitzGerald

RIO TINTO has begun to lay the groundwork for the joint development of bauxite resources at Weipa on Queensland's Cape York with its recently arrived substantial shareholder, China's Chinalco.

Fighting off a takeover bid from BHP Billiton, Rio has committed $US30 million ($32.5 million) to a feasibility study into the $US1 billion development of a new bauxite operation to the south of its existing Weipa bauxite mine and port.

With the additional mine, Weipa's bauxite output would increase from 18.2 million tonnes in 2007 to 35 million tonnes, giving the company increased capacity to supply customers and its Alcan-owned refineries.

While Rio did not mention the presence of Chinalco at Weipa, their respective leases over the the region's 4 billion tonne bauxite resources are adjacent to each other. Previous briefings by Rio's aluminium unit has floated the possibility of a link with Chinalco in the development of its controversial Aurukun bauxite deposit.

All that has followed the February sharemarket raid on Rio in which the state-owned Chinalco, with US aluminium group Alcoa as a junior partner, grabbed a 9 per cent stake.

Rio's move at Weipa also follows comments by its managing director, Tom Albanese, this week that unlocking the full force of Australia's mineral potential would require direct foreign investment.

Chinalco's Aurukun leases are controversial because the Queensland Government stripped French aluminium group Pechiney (now part of Rio's recently acquired Alcan) of them under its "use it or lose it" powers. Chinalco won the leases on the basis that it would develop a separate bauxite mine and alumina refinery.

The move by Rio throws doubts over Queensland now seeing the sort of multibillion-dollar investment the government thought would eventuate from introducing Chinalco as the new player at Weipa.

Rio's move will also cause interest in Brussels where the European Commission is putting BHP's proposed scrip offer for Rio through its anti-monopoly hoops. with AAP

© 2008 Sydney Morning Herald

Back to News Index | Back to Home