AusRAIL, Market Sectors

Rio Tinto to expand ports and rail to handle Hope Downs

<p>Rio Tinto appears set to use its existing infrastructure and ports to handle the extra 30m tonnes of iron ore a year it may get from its new 50:50 joint venture to develop Hope Downs with Gina Rinehart’s Hancock Prospecting.</p> <p>Rio’s $600m coup was announced on Friday (July 1), when Hancock Prospecting’s state development agreement with the Western Australian Government was due to expire. </p> <p>Rio said that all of its 116m tonne rail and port capacity from the Pilbara to Dampier was now committed to handling existing orders. </p> <p>Hope Downs is expected to start producing in 2008, with an initial rail spur connecting Hope Downs to the Pilbara Iron rail network to be named the Lang Hancock Railway after Ms Rinehart’s ore industry pioneer father. </p> <p>Rio is already spending $1.5bn on logistics that will boost Dampier from 74m tonnes to 112m tonnes, and the Robe River Associates port facilities at Cape Lambert to 50m tonnes. </p> <p>Rio’s ability to share infrastructure between Hamersley Iron, Hope Downs and Robe River will be an important factor in keeping down production costs as Rio takes on Brazil’s CVRD to become the world’s biggest iron ore producer. </p> <p>Hope Downs had earlier taken Rio to the Federal Court to try to get access to the Rio rail network.</p> <p>Rio Tinto Iron Ore chief executive Sam Walsh indicated that Hope Downs was an important new source for the company. </p> <p>"If we could find another tonne, we could sell it tomorrow," he told <em>The Australian</em> newspaper. </p> <p>Around 70% of the ore is expected to go to China, and Mr Walsh suggested that China would face higher ore prices again next year with the current slowdown in purchasing seen only as "a technical blip".</p> <p>Patrick had earlier flagged its interest in entering the bulk commodity sector with two proposals to Hope Downs for Pacific National to build and operate a separate Hope Downs rail operation and Patrick to build and operate the above-deck ore loading facilities. </p> <br />