Robe and Hamersley to Share Pilbara Rail Infrastructure, Says Rio Tinto.

Business Editors

LONDON--(BUSINESS WIRE)--July 2, 2001

Rio Tinto (NYSE: RTP). The Robe River joint venture partners have reached agreement to share rail infrastructure with Hamersley Iron.

The agreement provides for joint use of iron ore rail infrastructure in the Pilbara

Hamersley is a wholly owned subsidiary of Rio Tinto. Robe will continue as an independent iron ore producer in the joint venture between Rio Tinto (53%), Mitsui & Co (33%), Nippon Steel (10.5%) and Sumitomo Metal Industries (3.5%).

Under the agreement, the Pilbara Rail Company will operate and maintain the rail assets of Hamersley Iron and Robe. The Pilbara Rail Company will rail ore from mines in which Hamersley and Robe have an interest and will operate both tracks, but Robe and Hamersley will continue to own their respective rail assets. As well as providing rail system operational efficiencies, there is provision for port sharing, subject to agreement on user terms.

The agreement will enable completion of the development of Robe's West Angelas iron ore project, and will reduce the estimated capital cost from a revised A$1,100 million to A$880 million.

Less rail construction is now required to bring the West Angelas project on line, and will result in capital expenditure savings of approximately A$220 million. As part of the arrangements, the original planned 60-kilometre rail spur to the West Angelas project will now be linked to Hamersley's main rail line. In addition, the initial construction will include track connecting the Hamersley and Robe systems where the lines currently crossover; and approximately 50 kilometres of additional dual track on the busiest section of Hamersley's main rail line. The additional dual track will increase the efficiency of the rail network.

The establishment of the Pilbara Rail Company will occur after the necessary Government approvals have been obtained and will end the legal action launched by the Japanese participants last year. Once annual production at West Angelas has reached 15 million tonnes, Robe's Japanese participants will have an option to require completion of the balance of the West Angelas rail line.

Rio Tinto Iron Ore chief executive, Mr Chris Renwick said, "We are pleased to have reached agreement with our joint venture partners on West Angelas so that we can jointly realise the benefits of our new relationship and of the West Angelas project."

"Construction of the West Angelas mine site and port facilities is well advanced, and we can now concentrate on putting the remaining elements of the West Angelas development in place," he said. "I am confident that the framework we have agreed will provide a successful model to realise further opportunities for co-operation between the Robe Japanese participants and Rio Tinto."

Robe is expecting to ship first product from West Angelas early in the second half of 2002