Iron ore revenues

12th Apr 2006 09:02

Rio Tinto PLC12 April 2006 Up to A$43 billion in iron ore revenues at risk Australia could lose up to A$43 billion in export revenues and A$13 billion incapital investments over the next 20 years if third party access is imposed onmine to port rail infrastructure in the Western Australian iron ore industry,according to a report released today by management consultants Port JacksonPartners. The report, commissioned by Rio Tinto Iron Ore, states that the capacity ofAustralian iron ore producers to expand operations to meet increasing globaldemand could be severely restricted if third parties are granted access tointegrated single user rail infrastructure owned by the existing companies. The decision, whether or not to impose access, is currently before theAustralian Government and is expected to be announced by 22 May 2006. The economic evaluation of the potential impact of the decision, analyses twoscenarios. The first covers the consequences of a delayed expansion programmeand the other a single abandoned expansion. The least negative scenario, asingle abandoned expansion in a conservative growth environment, would result inlost revenue of A$18 billion and forgone capital investment of more than A$2.5billion over 20 years. Rio Tinto Iron Ore Chief Executive, Sam Walsh, said, "The efficiency of mine toport logistics in the Pilbara iron ore industry is second to none. It is asignificant contributing factor to Australia's position as the world's leadingsupplier of iron ore to the burgeoning Asian markets. "To maintain that leading position, iron ore producers must be able to respondto market demands quickly and have a high degree of flexibility in planning,implementing and adapting their expansion plans and operating practices. "If we are forced into drawn out negotiations with third parties to achieve whatwould otherwise be a prompt and planned response to market demand, Australia'seconomy will be the loser," Mr Walsh said. The decision before the Federal Government strikes at the heart of Australia'sinternational competitiveness in the export of iron ore, with A$20 billion incapital investment required to achieve an additional 300 million tonnes ofannual production capacity over the next 20 years if the industry is to retainits current market share of 37 per cent. Mr Walsh said, "It is imperative that the decision makers fully appreciate thevery large negative impact of a multi-user rail access recommendation by theNational Competition Council." The report, Economic Evaluation of the Impact of Lost Iron Ore Production andShare, April 2006, prepared by consultants Port Jackson Partners Limited, can beaccessed on www.pilbarairon.com. For further information, please contact: LONDON AUSTRALIA Media Relations Media RelationsHugh Leggatt Ian HeadOffice: +44 (0) 20 7753 2273 Office: +61 (0) 3 9283 3620Mobile: +44 (0) 7764 369 977 Mobile: +61 (0) 408 360 101 Investor Relations Investor RelationsNigel Jones Dave SkinnerOffice: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628Mobile: +44 (0) 7917 227 365 Mobile: +61 (0) 408 335 309 David Ovington Susie CreswellOffice: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3639Mobile: +44 (0) 7920 010 978 Mobile: +61 (0) 418 933 792 Website: www.riotinto.com This information is provided by RNS The company news service from the London Stock Exchange

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