Performance
Iron ore
Hamersley Iron (Rio Tinto: 100 per cent)
Hamersley Iron operates nine mines in
Western Australia, including three mines in
joint ventures, approximately 700 kilometres
of dedicated railway, and port and
infrastructure facilities located at Dampier.
These assets are run as a single operation
managed and maintained by Pilbara Iron.
In November 2008, RTIO completed the final phase of construction of Pilbara infrastructure to support an annual production capacity of 220 Mt/a. Dampier port's terminals at East Intercourse Island and Parker Point account for a combined capacity of 140 Mt/a, together with Cape Lambert's increased capacity of 80 Mt/a.
RTIO made substantial investments in rolling stock and replacement track across much of its rail network, including the acquisition of 40 new generation, energy efficient locomotives.
Hope Downs mine, a 50:50 joint venture with Hope Downs Iron Ore Pty Ltd (owned by Hancock Prospecting Pty Ltd), enjoyed its first year as a significant contributor to the production of the Pilbara Blend iron ore product. This was complemented by the first production of ore from the Hope Downs South expansion, completed ahead of schedule in November 2008.
RTIO also commenced several projects in connection with its plans to expand annual production capacity beyond 220 million tonnes. These included a US$149 million commitment for studies in respect of a new mine at the Western Turner Syncline, near Tom Price, which has a projected annual capacity of up to 29 million tonnes. Rio Tinto also invested US$500 million for a regional power upgrade in the Pilbara, including the installation of a new gas powered power plant adjacent to the 7 Mile rail operations centre. This plant is intended to replace the ageing, steam driven turbine plants at Dampier and Cape Lambert.
| Million tonnes | |
|---|---|
| China | 73.0 |
| Japan | 28.5 |
| Other Asia | 17.9 |
| Europe | 1.3 |
| Other | 0.4 |
| Total | 121.2 |
Note: This table includes 100 per cent of all shipments through joint ventures.
Robe River Iron Associates (Rio Tinto: 53 per cent)
Robe River Iron Associates (Robe) is an
unincorporated joint venture in which
Mitsui (33 per cent), Nippon Steel (10.5 per
cent) and Sumitomo Metal Industries (3.5
per cent) hold interests. Robe River is the
world's fourth largest seaborne trader in
iron ore.
Robe River operates two open pit mining operations in Western Australia. Mesa J is located in the Robe Valley, south of the town of Pannawonica. The mine produces Robe River fines and lump, which are pisolitic iron ore products. The West Angelas mine, opened in 2002, is located approximately 100 kilometres west of the town of Newman. The mine produces Marra Mamba iron ore products, which are incorporated into the Pilbara Blend.
The upgrade of Cape Lambert port to an annual capacity of 80 million tonnes was completed in November 2008. This was the final step in the achievement of total annual export capacity of 220 Mt/a.
Work progressed during 2008 on the new US$901 million Mesa A/Warramboo mine west of Pannawonica township, which is intended to replace Mesa J as the main source of Robe's pisolite production once the Mesa J deposit is depleted. In September 2008, Rio Tinto announced the US$257 million upgrade of Pannawonica to support the new mine.
Robe River primarily exports under medium and long term supply contracts with major integrated steel mill customers in Japan, China, South Korea and Europe.
| Million tonnes | |
|---|---|
| China | 23.2 |
| Japan | 19.6 |
| Europe | 4.5 |
| Other Asia | 3.0 |
| Total | 50.3 |
2008 operating performance
Rio Tinto operates its mines, rail and port
operations in the Pilbara as an integrated
system to maximise value through
efficiencies of scale and flexibility. The assets
and operations of Hamersley Iron and Robe
River are effectively combined for operational
management purposes, notwithstanding the
varying financial interests in the joint
ventures managed by RTIO.
Hamersley Iron's total production in 2008 was 125.1 million tonnes, 13 million tonnes more than the 112.1 million tonnes in 2007.
Robe River's total production in 2008 was 50.2 million tonnes, comprising 25.0 million tonnes from Mesa J, and 25.2 million tonnes from West Angelas. Sales were 24.8 million tonnes of Mesa J and 25.5 million tonnes of West Angelas products. These results were achieved amid significant construction activity.
One of RTIO's key projects during 2008 was the Drumbeat initiative, which was designed to eliminate bottlenecks across the system following the expansion to 220 Mt/a, completed in November 2008. The Drumbeat initiative focuses on improving rail assets such as rolling stock and achieving a more Performance Aerial view of the Mt Tom Price mine in Western Australia efficient integration between rail and port operations. While challenges remain, during the second half of 2008, production rates were regularly in excess of 200 million tonnes on an annualised basis.
A major gas explosion at Apache Energy's Varanus Island plant off the Pilbara coast effectively removed nearly two thirds of RTIO's power supply, necessitating urgent curtailment of power usage and the sourcing of alternative supply from other sources. The outage lasted two months in June and July, however gas supplies in Western Australia are not expected to return to pre-incident levels until May 2009. While contingency planning enabled the issue to be managed, operations were impacted, and a significant additional cost of approximately A$70 million has been incurred up to the end of 2008.
The strike by a small number of locomotive drivers in October and November 2008 also produced challenges to efficiency, but were overcome with the assistance of the vast majority of rail workers who prevented any real impact, such that October was a record month for tonnes railed.
In August a Cape Lambert rail car dumper was severely damaged in an accident. The dumper was returned to service in mid September 2008 after repair, integrity and operational checks. While out of service, RTIO's other four dumpers at Dampier and Cape Lambert operated at peak capacity, demonstrating the flexibility of the port loading system and helping to minimise loss of tonnage and demurrage.
In November 2008, RTIO announced that, as a result of the global economic crisis and the sudden decrease in Chinese demand for iron ore, it would cut its shipments by ten per cent from the expected 190-195 million tonnes (on a 100 per cent basis) for 2008. Production was subsequently limited across the Pilbara, with significant redeployment of staff and assets to assist with new stockpiles and operational shutdowns. Initially operations at the Channar and Brockman 2 mines were suspended. This was followed by a two week general shutdown of all mine and rail operations across the Pilbara in late December. Operations at all mines were restarted in early January 2009.
Iron Ore Company of Canada (Rio Tinto: 58.7 per cent)
RTIO operates Iron Ore Company of Canada
(IOC) on behalf of shareholders Mitsubishi
(26.2 per cent) and the Labrador Iron Ore
Royalty Income Fund (15.1 per cent).
IOC is Canada's largest iron ore pellet producer based on 2008 production. It operates an open pit mine, concentrator and pellet plant at Labrador City, Newfoundland and Labrador, together with a 418 kilometre railway to its port facilities in Sept-Îles, Quebec. IOC has large ore reserves with low levels of contaminants.
Products are transported on IOC's railway to Sept-Îles on the St Lawrence Seaway. IOC's port on the St Lawrence Seaway is ice free all year and handles both ocean going ore carriers and Lakers, providing competitive access to all seaborne pellet markets and to the North American Great Lakes region. IOC exports its concentrate and pellet products to major North American, European and Asian steel makers.
In December 2008, RTIO decided to bring production into line with reduced demand through a number of measures. A pellet line was closed, and another scheduled for a maintenance shutdown early in 2009. The capacity expansion programme was suspended, including the PODS (parallel ore delivery system). As with all slowdown measures, the priority is to best position IOC to take advantage of the eventual improvement in market conditions.
IOC employs approximately 2,000 people.
| Million tonnes | |
|---|---|
| Europe | 6.0 |
| Asia Pacific | 3.5 |
| North America | 5.1 |
| Middle East | 0.5 |
| Total | 15.1 |
2008 operating performance
Production of pellets and concentrates
continued strongly through the year, which
highlighted the record mine performance
from the first half and de-bottlenecking
efforts at the plant.
The demand for IOC's products strengthened further in 2008 with concentrate prices increasing by 68.75 per cent and pellet prices by 86.67 per cent over last year's benchmark prices.
Total saleable production was 15.8 million tonnes, up from 13.2 million tonnes in 2007 during which a strike occurred. Pellet production was 12.6 million tonnes (11.3 million tonnes in 2007) with saleable concentrate being 3.2 million tonnes (1.9 million tonnes in 2007). Higher production levels and higher sales prices more than offset higher input costs.
Mineraçăo Corumbaense Reunida (Corumbá) (Rio Tinto: 100 per cent)
In January 2009, Rio Tinto announced the
sale of Corumbá to the Brazilian diversified
miner, Vale, for US$750 million. The
transaction is expected to close in the
second half of 2009.
Corumbá produced 2.0 million tonnes of lump and fines iron ore in 2008, selling 1.8 million tonnes to customers across South America, Europe and Asia. A number of developments through the year led to improved efficiency, including the introduction of a dry-ore plant (designed to encourage a greater market for direct reduction processes).
Work continued on a number of studies to increase capacity substantially from approximately 2 Mt/a to more than 12 Mt/a, together with early work towards establishing better barging arrangements and a new port in Uruguay.
Corumbá received the Chief Executive's Safety Award for the third time, firmly establishing its leadership credentials in this most important aspect of operations.
HIsmelt® (Rio Tinto: 60 per cent)
The HIsmelt® iron making project at
Kwinana in Western Australia is a joint
venture among Rio Tinto (60 per cent interest
through its subsidiary, HIsmelt Corporation),
US steelmaker Nucor Corporation (25 per
cent), Mitsubishi Corporation (ten per cent),
and Chinese steelmaker Shougang
Corporation (five per cent).
Plant and process performance improved in 2008, and towards the end of the year, installation of process improvements resulted in a fundamental improvement in the output. As a result of the improvements, HIsmelt® achieved a range of new production records, including an average daily production rate of 1,660 tonnes of pig iron sustained over a five day period.
Due to substantial reduction in demand for HIsmelt® product, in December 2008 a three month shutdown was instituted. RTIO will consider reopening HIsmelt® in 2009, following an assessment of prevailing market conditions. As a result of this decision an impairment charge of US$182 million was recorded in 2008.
Interest in the HIsmelt® technology remains strong, and licence negotiations continue with several Chinese and Indian steelmakers adding to the existing three licences already agreed. The European Union supported ULCOS (Ultra-Low Carbon dioxide (CO2) Steelmaking) consortium announced plans to build a HIsarna® pilot plant in Germany from 2010, combining HIsmelt® technology with an alternative iron ore pre-treatment option in a quest to reduce the CO2 emissions of current steel technologies by at least 50 per cent.
The winning of the Golden Gecko award for environmental excellence was an endorsement of the unique selling proposition of HIsmelt® technology in a world increasingly conscious of the need to limit industry's environmental footprint.
