Performance
2008 in review
In April 2008, the High Court of Australia ruled in RTIO's favour over the rights to its Shovelanna deposit, east of Newman in the Pilbara. The decision upheld the Western Australian Minister for Resources' decision to terminate a rival exploration licence application by Cazaly Resources. Another action by Cazaly Resources, calling into question the rights held by the Rhodes Ridge Joint Venture (Rio Tinto 50 per cent share) to its eponymous deposit east of Yandicoogina, and applying for tenure over that area, is in progress. The Rhodes Ridge Joint Venture rights have, notwithstanding, been renewed by the State for a further annual term commencing 1 January 2009.
In June 2008, RTIO, through Hamersley Iron, announced that it had reached agreement with Pilbara mining junior Iron Ore Holdings (IOH) on commercial terms for an innovative mine gate sales arrangement, enabling the purchase of iron ore from a new IOH mine at Phil's Creek, 90 kilometres from Newman - a deposit that would be otherwise "stranded" by its remoteness from infrastructure. This innovative agreement was hailed for demonstrating the use of a commercial agreement to reach a satisfactory outcome without resort to mandating rail access.
In November 2008 Rio Tinto appealed to the Australian Competition Tribunal against the decision of the Australian Federal Treasurer to declare its Pilbara rail network available for competitors seeking access to infrastructure, as provided for under the Trade Practices Act 1974. The hearing starts in late 2009.
The decision of the Federal Treasurer is now stayed pending the outcome of that appeal. If the decision of the Treasurer is not overturned on appeal this would not of itself allow access to third parties. Rather they would be entitled to seek that access terms be agreed or arbitrated, and additional requirements would have to be met at this second stage (some within and some outside the control of those third parties). If those additional requirements are not met, or are not able to be met, then access would not occur.
Rio Tinto also engaged with State representatives during 2008 in relation to a rail haulage regime being considered by the State. The State has indicated that it will not seek to unilaterally impose such a regime.
Significant operational challenges during 2008 were proactively managed to mitigate value destruction caused by external events (loss of a majority of Pilbara power supply due to an explosion at Apache Energy's gas plant, and threats to commuter air services as a result of industrial action at National Jet Systems) and internal events such as the ineffective industrial action taken by a small number of trade union members in the rail division.
