Rio Tinto is proceeding with development of the Hope Downs 4 iron ore project in the Pilbara region of Western Australia and with development of an underground block cave at its Argyle diamond mine in the Kimberley region of Western Australia. The Hope Downs 4 project is a 50:50 joint venture of Rio Tinto and Hancock Prospecting; the Argyle diamond mine is owned 100% by Rio Tinto and has been producing from an open-pit since 1985.

Development at Hope Downs 4: The Hope Downs 4 iron ore project is located 30 km north of Newman, Western Australia, adjacent to the Rio Tinto-Hancock joint venture’s existing Hope 1 North and Hope 1 South mines. Hope Downs 4 will have capacity to produce 15 million mt/y and is budgeted at $1.6 billion. First production is anticipated in 2013. Construction is expected to begin in early 2011, subject to obtaining necessary regulatory and other approvals.

KBR has been awarded the engineering, procurement and construction management contract for Hope Downs 4. Project scope will include an ore crushing, scrubbing and screening plant sized to accept 220-mt capacity haul trucks; bulk fuel, lubricant and explosive facilities; stockpile stacking, reclaiming and rail facilities to transport product to Rio Tinto port facilities at Dampier and Cape Lambert; temporary and permanent accommodation, including power, water and communications infrastructure; and administration, warehousing and workshop facilities to support mine operations and maintenance requirements.

Rio Tinto will also commit an additional $425 million to fully cover the capital cost of the rail, rolling stock and power infrastructure owned by Rio Tinto required for the development. A 52-km spur line connecting to the Lang Hancock Railway will link the mine to Rio Tinto’s existing rail and port infrastructure.

The Hope Downs 4 orebody has recoverable product ore reserves of 73 million mt proven, grading 63% iron, and 64 million mt probable, grading 63.2% iron, at a cutoff of 59.5% iron. Measured, indicated and inferred resources total 163 million mt, grading 62.5% iron at a cutoff of ≥60% Fe.

Going underground at Argyle: Rio Tinto will invest $803 million to ramp up the underground block cave project at its Argyle diamond mine. Development activities will include construction of extraction services and installation of crushers, a conveyer and pump stations at the mine. Construction activity will ramp up in the first half of 2011, with targeted production rates of 9 million mt/y within two years.

Following a transition from the current open-pit operation at Argyle, the underground mine is expected to be fully operational in 2013. The project will extend mining at Argyle until at least 2019.

Rio Tinto’s board of directors initially approved construction of an underground mine at Argyle in 2005, and an exploratory decline was constructed as part of the feasibility study for underground development. Commenting on Rio Tinto’s current decision to proceed with the underground project, Rio Tinto Diamonds and Minerals Chief Executive Harry Kenyon-Slaney said: “This investment underlines our commitment to, and confidence in, the world diamond industry. The project was slowed in 2009 due to the global financial crisis, but the diamond market continues to recover and long-term industry fundamentals remain healthy. A significant supply gap is expected to emerge in the medium to long term, and the outlook for demand is strong, driven by the growth of emerging markets. Argyle is well positioned to capture the new demand.”