Rio Tinto gives Hail Creek the thumbs up

Rio Tinto (RTP-N) and its joint-venture partners have approved the development of the A$425-million Hail Creek coal project in central Queensland, Australia.

The project is located over one of the largest coking coal deposits in the world. Its total resources are pegged at 1.2 billion tonnes.

The proposed open-pit mine is a joint venture between Rio Tinto, with a 92% stake, Japan’s Marubeni, with 5.33%, and Sumitomo, with 2.67%. Rio Tinto’s wholly owned subsidiary, Pacific Coal, will build and manage the operation.

At full steam, the mine is expected to: churn out 5.5 million tonnes of high-quality hard coking coal; and export earnings of more than A$400 million annually, at current market prices.

Included in the A$425-million price tag are mine infrastructure, a wash plant and a 52-km railway link to the Goonyella rail line. Coal from Hail Creek will be transported 175 km to the Dalrymple Bay coal terminal. The first shipments are slated for the third quarter of 2003.

According to Rio Tinto, the go-ahead comes in light of mine closures in Canada and an energy shortage in the U.S. The company says the project’s low sulphur characteristics offer significant environmental advantages.

Rio already has letters of intent from customers in Asia and Europe for the purchase of up to 50% of the operation’s output.