New projects in new places

Fresh frontiers are being opened up by Rio Tinto to take advantage of changing political climates, modern exploration techniques and improving investment conditions. Hugh Leggatt reports.

Investors compare mining companies on a number of measures. One of them is exposure to “country risk”. A company’s willingness to invest hundreds of millions of dollars in a developing country may be seen as a plus by “bullish” investors, or as a minus by those who are more cautious and conservative.

Nearly 90 per cent of the Rio Tinto Group’s assets are located in Canada, the United States and Australia, countries with strong democracies, accountable governments and clear regulation. This is not to say the Group has been afraid of embarking on operations elsewhere. Rio Tinto operated in central Africa in the 1950s. Successful mines have been developed in South Africa, Namibia and remote areas of Indonesia, Brazil and Papua New Guinea.

But today, as more countries open up, investment conditions improve and modern exploration techniques are applied in new places, the boundaries between “safe” and “unsafe” are being redrawn. The major mineral sands project in Madagascar, announced by Rio Tinto last month, stands on this new frontier. Also this year, approval was given for a feasibility study on a potash project in a remote corner of Argentina.

Another case in point was a seed sown back in 1996 when Rio Tinto Exploration started a reconnaissance programme in the Simandou Range in eastern Guinea following up on reports of iron ore mineralization made in the 1950s during the French colonial period and in the 1970s by a Chinese mission.