Aggressive labor stance threatens Pilbara expansion: Rio Tinto

Sat Dec 3, 2011 9:44pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

SYDNEY (Reuters) - Rio Tinto (RIO.L: Quote)(RIO.AX: Quote)chief executive Tom Albanese said an "aggressive" stance by unions, high labor costs and a potential downturn in world prices threaten plans for vast expansion of its key Australian iron ore operations.

Albanese also said that he would lobby Canada to ensure the Anglo-Australian miner was the operator of the planned Roughrider uranium project in Saskatchewan province, despite legal hurdles, after its successful bid for uranium prospector HathorHAT.TO.

Speaking to the Australian Broadcasting Corporation in an interview broadcast on Sunday, Albanese said he would like to see Rio Tinto's giant operations in the Pilbara region of Western Australia reach 450 million tons of ore annually, double current production of 225 million tons.

However, Albanese said that with expanding iron ore operations around the world, assumptions that the floor price would not go much below $120 a ton might be valid next year but not long beyond that.

"Our Pilbara business is designed to operate well and stay profitable in the 120 range," Albanese told Inside Business. "Again, what we have to do is we have to control cost pressure. I think the one thing I'm concerned about is that our cost pressures in the Pilbara, our cost pressures in Australia are quite a bit higher than cost pressures anywhere else in the world."

The Rio Tinto chief said "militant type relationships" with unions could reduce performance, with productivity already compounded by the ongoing need to attract people to more remote areas.

Albanese said there were plans to expand production in the Pilbara and he would like to see it expand even beyond 450 million tons, but "all the other pieces have to be in place."

The Rio Tinto chief also said he would be lobbying the Canadian government and Saskatchewan provincial government to ensure Rio Tinto was the operator of the planned Roughrider uranium project following its C$654 million ($643 million) takeover of Hathor.

Current Canadian law restricts foreign companies to a 49 percent stake of an operating uranium mine. There have been suggestions Rio Tinto would need to find a domestic partner before it could start up the Roughrider project in Saskatchewan's uranium-rich Athabasca basin.

(Editing by Nick Macfie)