TORONTO, Sept. 4 /CNW/ - Iron Ore Company of Canada (IOC) announced today a $300 million expansion program to increase annual production to 22.8 million tonnes including $75 million towards the feasibility study to increase production to 26 million tonnes (see attached IOC press release). This is in addition to the $500 million expansion program announced in March. When completed this will result in a substantial increase in the royalty revenue received by Labrador Iron Ore Royalty Income Fund from IOC, subject to future prices and exchange rates.
NEWS RELEASE ------------------------------------------------------------------------- Iron Ore Company of Canada IOC AND RIO TINTO ANNOUNCE A FURTHER C$300 MILLION TOWARDS EXPANSIONS, AS PART OF ITS 50% LONGTERM INCREASE IN IRON ORE PRODUCTION
(Canada) St. John's - The Iron Ore Company of Canada (IOC) and Rio Tinto have announced the approval of C$300 million to increase IOC's annual production of iron ore concentrate to 22.8 million tonnes. This increase in concentrate production will be used to raise annual pellet production at our Labrador City plant to 13.8 million tonnes. The investment is the second phase of an expansion program that would see a 50% increase in production capability by 2011.
"The decision highlights not only the value of Rio Tinto's global platform of iron ore production, but also the level of confidence in market conditions over the longer term," said IOC Chairman and Rio Tinto Chief Iron Ore Executive, Sam Walsh
"The iron ore market remains tight and our substantial reinvestment in our operations in Canada and worldwide demonstrates the confidence we have in that market," he said. "The IOC expansion program emphasizes the Group's ability to increase supply from an existing strong base across several continents."
In March, the company announced an investment of C$500 million for the first phase of this project. Today's announcement which includes C$75 million towards the third phase feasibility study into expanding annual production to about 26 million tonnes will bring total investment to date to C$800 million.
This additional investment is to increase magnetite recovery by installing a new 10MW ball mill with associated services and equipment in a new building, and to improve pellet plant productivity by adding, flotation plant capacity, installing an advanced control system for pellet feed grinding, and introducing new pellet screening technology. The site electrical system will be enhanced by installing a new 46kV substation.
IOC President and CEO, Terence F. Bowles, said Phase 1 and 2 of this expansion will provide substantial employment and economic growth in our communities of Labrador City and Sept-Iles. IOC's 2,300 people, of which 1,650 work in Newfoundland and Labrador, constitute one of the Province's largest industrial workforces, and is expected to grow by a total of 200 with these initial two phases. Construction jobs are also expected to peak at 250.
"IOC has been the main driver of the Labrador West economy for almost 50 years. Our expansion program shows we are prepared to invest even further in this community and ensure a new generation of families in the region will have rewarding careers for years to come," said Mr. Bowles, speaking at a Board of Trade luncheon in St. John's, the capital city of Newfoundland and Labrador. "While we're looking for engineers, other professionals, people with training and/or experience in the heavy equipment industry, skilled trades, and IT experts to consider IOC in their career plans, we also recognize that our expansion plans will create considerable indirect and induced employment in the region" he added.
"This major expansion reflects the current strong market conditions as well as the confidence of our shareholders in our ability to deliver," added Mr. Bowles. "IOC's commitment to sustainable development is fully reflected in this expansion program. The company is consulting and working very closely with local community stakeholders in Labrador City and Sept-Iles to optimize economic and social impacts of the expansion and to protect the natural environment."
About the Iron Ore Company of Canada
IOC is Canada's largest iron ore producer, with iron ore being one of Canada's most important mineral products in terms of both tonnage and value. IOC is known globally for the high quality of its products, which are often used by steelmakers to improve quality and productivity and reduce greenhouse gas emissions. Its broad product range is sold globally to all segments of the steel industry including the high growth direct-reduction sector.
About Rio Tinto
Rio Tinto is the major shareholder of IOC (58.72%), along with Mitsubishi Corporation (26.18%), and Labrador Iron Ore Royalty Income Fund (15.10%). Rio Tinto is a leading international mining group headquartered in the UK, whose focus is finding, mining, and processing mineral resources. Rio Tinto Iron Ore is headquartered in Perth, Western Australia with Sam Walsh as Chief Executive. This investment is one of many being made in Canada by IOC's major shareholder Rio Tinto, which has activities in more than 40 countries worldwide, including mining developments and acquisitions in British Columbia, Northwest Territories and Quebec.
For more information please contact:
Michel Filion, Director of Communications and External Relations
IOC: Montreal, Quebec 514-217-6253
This announcement includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Rio Tinto's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to Rio Tinto's products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rio Tinto, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding Rio Tinto's present and future business strategies and the environment in which Rio Tinto will operate in the future. Among the important factors that could cause Rio Tinto's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation and such other risk factors identified in Rio Tinto's most recent Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the "SEC") or Form 6-Ks furnished to the SEC. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Rio Tinto expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the "Takeover Code"), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority and the Listing Rules of the Australian Securities Exchange) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Rio Tinto's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Nothing in this announcement should be interpreted to mean that future earnings per share of Rio Tinto plc or Rio Tinto Limited will necessarily match or exceed its historical published earnings per share.
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