Rio Freezes New IO Capital: Silvergrass Dead

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Rio Tinto freezes new iron ore capital


Sam Walsh has asserted control of the one uncontroversial lever available to the Commonwealth should it really believe iron ore's majors have been predatory and nation-damaging in growing their production to protect and defend market share.

As they are in any mining endeavour, government approvals, both state and federal, are the rock upon which new projects are founded. And Rio Tinto has long indicated that it would need to build at least one new iron ore mine in the near future if it is to sustain its step-up to annual production of a mind-boggling 360 million tonnes.

The new mine is called Silvergrass and, though a final investment decision has been twice delayed, there was every reason to believe that Rio would push the button on the $US1 billion ($1.2 billion) expansion on the company's revised schedule of 2016.

Silvergrass currently lacks the Commonwealth environmental permits and the state agreements needed for progress and there was a risk this would become a pressure point should the stand-off between Andrew Forrest and his competitors gain the quantum of political traction that the iron ore billionaire wants it to.