Rio Tinto sits tight on plan for ShovelannaJOHN PHACEASRio Tinto...

Rio Tinto sits tight on plan for Shovelanna

JOHN PHACEAS

Rio Tinto had absolutely no obligation to bring forward development of the Shovelanna iron ore deposit in the Pilbara after controversially winning it back from upstart junior Cazaly Resources, the mining giant's London-based chairman said yesterday.

In Perth to address an industry breakfast, Rio chairman Paul Skinner said the scale of Rio's iron ore business in the Pilbara required "intelligent" long-term access to resources to generate maximum value for WA.

Though Cazaly planned to develop Shovelanna within three years and the project had lain idle for two decades in Rio's hands, Mr Skinner said there was not even a "moral obligation" to fast-track the project.

"What companies like ours always have to do as major global investors is find the point at which host governments' interests, and our interests are properly aligned and that that particular resource is developed in the way which will give the long-term best value in this case to WA," he said.

Cazaly continues to threaten a legal challenge to last week's ruling by State Resources Minister John Bowler to terminate its application for the lease "in the public interest", which has cleared the way for it to be returned to Rio.

Mr Bowler on Thursday argued it would have been against the public interest to strip Shovelanna from Rio on a "technicality", given it had paid to renew the lease in July but a courier failed to deliver renewal documents to the Marble Bar Registrar before the lease expired in August.

Mr Bowler also argued that the health of WA's massive iron ore Continued on page 64Rio holds off Shovelanna

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industry depended on producers retaining long-term security of tenure to resources.

Cazaly managing director Nathan McMahon yesterday said it was outrageous Rio was unapologetic about its intention to keep Shovelanna in mothballs.

"Rio hold mineral rights to over 10,000sq km in WA and it is not up to them to decide when those resources are developed," he said. "These are our State's resources and should be utilised fairly for all participants, not just one or two select parties."

Mr McMahon said Cazaly remained confident it could mount legal action to have the decision reviewed, but was waiting on outcome of its Freedom of Information applications for all government documents relating to the decision before proceeding.

Legal experts are uncertain of Cazaly's prospects.

But in a similar case in 2000, Kimberley Diamonds successfully won the right to challenge a decision by then Mines Minister Norman Moore.

Kimberley had applied to the Wardens Court to have Rio stripped of the Ellendale diamond project on the grounds it had failed to carry its required work commitments, but Mr Moore struck out the application. It then won the right to challenge Mr Moore's ruling in the WA Supreme Court.

Rio later sold the project to Kimberley for $23.5 million.