TORONTO, March 11 /CNW/ - Iron Ore Company of Canada (IOC) announced today a $500 million expansion program to increase annual production to 22 million tonnes with a feasibility study to increase production to 25 million tonnes (see attached IOC press release). 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.
IOC AND RIO TINTO ANNOUNCE A $500 MILLION EXPANSION AS THE FIRST PHASE OF A THREE-YEAR PLAN TO INCREASE CAPACITY BY 50%
For Immediate Release: March 11, 2008
(Canada) St. John's, Labrador City, Sept-Iles, Montreal - March 11, 2008
The Iron Ore Company of Canada (IOC) and Rio Tinto have announced the approval of $500 million to increase the IOC's annual production of iron ore concentrate to 22 million tonnes. The investment is the first phase of an expansion program that may see a 50% increase in production capability by 2011.
Work will commence immediately to expand IOC's mining and processing facilities in Labrador West and increase transportation capacity on its 418-km railway to its port facilities in Sept-Iles, Quebec. The investment includes the purchase of new mining equipment, as well as installation of a new crusher station in the mine and autogenous grinding mill in the concentrator, as well as a 6-kilometre overland conveyor to link them together. New locomotives and rail cars will be purchased to increase railway capacity.
The remainder of the expansion program is currently in feasibility studies and a decision will be made later this year on plans to further increase annual concentrate production to more than 25 million tonnes and pellet production to 14.5 million tonnes.
IOC Chairman and Rio Tinto Iron Ore Chief Executive Sam Walsh said the decision highlighted 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.
"The iron ore market is as tight as it has ever been and our sustained and 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."
IOC President and CEO, Terence F. Bowles, said the expansion will provide substantial employment and economic growth in our communities of Labrador City and Sept Iles. IOC's 1,900 people, the majority which work in Newfoundland and Labrador, and constitute the Provinces largest industrial workforce, will grow by a further 200 with this expansion. Construction jobs are expected to peak at 250 over the next three years.
"This investment secures the long-term future of our operations and improves the livelihoods of those around us," said Mr. Bowles, speaking at a news conference broadcast on-line from St. John's, the capital city of Newfoundland and Labrador. "IOC has been the main driver of the Labrador West economy for almost 50 years, and this expansion program ensures that a new generation of families in the region can be confident that there will be rewarding careers for years to come," 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 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 green house gas emissions. Its broad product range is sold globally to all segments of the steel industry including the high growth direct-reduction sector. IOC has 1.3 billion tonnes of iron ore reserves and significant resources and exploration potential beyond this.
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.
Cutline for Photo: (Conveyor) a rendering shows an aerial view of the Labrador City mine, which will see a new overland conveyor installed as part of its production upgrade.
For more information please contact:
Michel Filion, Director of Communications and External Relations
IOC: Montreal, Quebec 514-285-8441
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.
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