Rio Tinto to buy ore and keep third parties off tracks

bevans · Posted: Fri Jul 25, 2008 5:14 pm

RIO Tinto will purchase ore from a junior explorer as the mining giant seeks to prevent third parties gaining access to its railway in Western Australia.

The world's second-largest iron ore producer has agreed to purchase the steelmaking product from Iron Ore Holdings Ltd's (IOH) Phils Creek mine, 90 km from Newman in the Pilbara region of WA.

"It demonstrates our preferred alternative to the growing demands from government and industry for access to our rail infrastructure," Rio Tinto iron ore chief executive Sam Walsh said in a statement.

Junior iron ore companies led by Fortescue Metals Group Ltd are seeking access to Rio Tinto and BHP Billiton Ltd's railways in the Pilbara to export the steel-making commodity amid rising prices for the commodity.

IOH shares gained 4.5 cents, or 7.89 per cent to 61.5 cents by 1534 AEST, while Rio Tinto dropped $4.11 to $115.99.

The National Competition Council (NCC) last month called for public comment on its draft recommendation that three separate railways owned by the majors be opened for access by third parties to improve competition in the haulage market for iron ore.

The NCC will make its final recommendations to Federal Treasurer Wayne Swan following the public submission period.

Under the agreement with Rio Tinto, IOH will deliver the ore to the Yandicoogina stockyard where Rio Tinto would take ownership and transport it for sale to customers.

IOH's Phils Creek project is still in the feasibility stage but it is envisaged the operation would produce about 1.5 million tonnes of iron ore per year.

"This commercial agreement represents an excellent opportunity for Rio Tinto to gain access to extra tonnage and, importantly, in a way that does not jeopardise the efficiency of our fully integrated production system," Mr Walsh said.

Melbourne Herald-Sun

RP2 - Project Director

"Victoria, the home of world class project blowouts and overruns" Mr. Bachelor, hang your head in Shame!

Controller · Posted: Sat Jul 26, 2008 4:15 pm

A smart move by both Rio and IOH......a win-win situation.

Why waste good money trying to fight the big multi-nationals....you never win.

All gave some, Some gave all

awsgc24 · Posted: Sat Jul 26, 2008 5:11 pm

And at what price will the third party ore be bought at?

Controller · Posted: Sun Jul 27, 2008 7:09 pm

who gives a hoot, as long as both parties have come to an amicable arrangement Cool

All gave some, Some gave all

awsgc24 · Posted: Sun Jul 27, 2008 7:14 pm

PILBARAMAN · Posted: Sun Jul 27, 2008 10:00 pm

They have signed a contract to sell their Ore,they will make money simply because Rio and themselves are splitting the difference between them hauling it to Rios Rail and then Rio hauling to the port,they would both be making decent money at current prices,and when you look at infrastructure costs it was mostly likely the best scenario and amicable.