IOC Announce a Further $300 million Expansion Program



    TORONTO, Sept. 4 /CNW/ - Iron Ore Company of Canada (IOC) announced today
a $300 million expansion program to increase annual production to 22.8 million
tonnes including $75 million towards the feasibility study to increase
production to 26 million tonnes (see attached IOC press release). This is in
addition to the $500 million expansion program announced in March. When
completed this will result in a substantial increase in the royalty revenue
received by Labrador Iron Ore Royalty Income Fund from IOC, subject to future
prices and exchange rates.

    
    NEWS RELEASE
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    Iron Ore Company of Canada

    IOC AND RIO TINTO ANNOUNCE A FURTHER C$300 MILLION TOWARDS EXPANSIONS, AS
    PART OF ITS 50% LONGTERM INCREASE IN IRON ORE PRODUCTION
    

    (Canada) St. John's - The Iron Ore Company of Canada (IOC) and Rio Tinto
have announced the approval of C$300 million to increase IOC's annual
production of iron ore concentrate to 22.8 million tonnes. This increase in
concentrate production will be used to raise annual pellet production at our
Labrador City plant to 13.8 million tonnes. The investment is the second phase
of an expansion program that would see a 50% increase in production capability
by 2011.
    "The decision highlights not only the value of Rio Tinto's global
platform of iron ore production, but also the level of confidence in market
conditions over the longer term," said IOC Chairman and Rio Tinto Chief Iron
Ore Executive, Sam Walsh
    "The iron ore market remains tight and our substantial reinvestment in
our operations in Canada and worldwide demonstrates the confidence we have in
that market," he said. "The IOC expansion program emphasizes the Group's
ability to increase supply from an existing strong base across several
continents."
    In March, the company announced an investment of C$500 million for the
first phase of this project. Today's announcement which includes C$75 million
towards the third phase feasibility study into expanding annual production to
about 26 million tonnes will bring total investment to date to C$800 million.
    This additional investment is to increase magnetite recovery by
installing a new 10MW ball mill with associated services and equipment in a
new building, and to improve pellet plant productivity by adding, flotation
plant capacity, installing an advanced control system for pellet feed
grinding, and introducing new pellet screening technology. The site electrical
system will be enhanced by installing a new 46kV substation.
    IOC President and CEO, Terence F. Bowles, said Phase 1 and 2 of this
expansion will provide substantial employment and economic growth in our
communities of Labrador City and Sept-Iles. IOC's 2,300 people, of which 1,650
work in Newfoundland and Labrador, constitute one of the Province's largest
industrial workforces, and is expected to grow by a total of 200 with these
initial two phases. Construction jobs are also expected to peak at 250.
    "IOC has been the main driver of the Labrador West economy for almost 50
years. Our expansion program shows we are prepared to invest even further in
this community and ensure a new generation of families in the region will have
rewarding careers for years to come," said Mr. Bowles, speaking at a Board of
Trade luncheon in St. John's, the capital city of Newfoundland and Labrador.
"While we're looking for engineers, other professionals, people with training
and/or experience in the heavy equipment industry, skilled trades, and IT
experts to consider IOC in their career plans, we also recognize that our
expansion plans will create considerable indirect and induced employment in
the region" he added.
    "This major expansion reflects the current strong market conditions as
well as the confidence of our shareholders in our ability to deliver," added
Mr. Bowles. "IOC's commitment to sustainable development is fully reflected in
this expansion program. The company is consulting and working very closely
with local community stakeholders in Labrador City and Sept-Iles to optimize
economic and social impacts of the expansion and to protect the natural
environment."

    About the Iron Ore Company of Canada

    IOC is Canada's largest iron ore producer, with iron ore being one of
Canada's most important mineral products in terms of both tonnage and value.
IOC is known globally for the high quality of its products, which are often
used by steelmakers to improve quality and productivity and reduce greenhouse
gas emissions. Its broad product range is sold globally to all segments of the
steel industry including the high growth direct-reduction sector.

    About Rio Tinto

    Rio Tinto is the major shareholder of IOC (58.72%), along with Mitsubishi
Corporation (26.18%), and Labrador Iron Ore Royalty Income Fund (15.10%). Rio
Tinto is a leading international mining group headquartered in the UK, whose
focus is finding, mining, and processing mineral resources. Rio Tinto Iron Ore
is headquartered in Perth, Western Australia with Sam Walsh as Chief
Executive. This investment is one of many being made in Canada by IOC's major
shareholder Rio Tinto, which has activities in more than 40 countries
worldwide, including mining developments and acquisitions in British Columbia,
Northwest Territories and Quebec.

    For more information please contact:
    Michel Filion, Director of Communications and External Relations
    IOC: Montréal, Québec 514-217-6253
    www.ironore.ca

    Forward-Looking Statements

    This announcement includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical facts included in this announcement, including,
without limitation, those regarding Rio Tinto's financial position, business
strategy, plans and objectives of management for future operations (including
development plans and objectives relating to Rio Tinto's products, production
forecasts and reserve and resource positions), are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of Rio Tinto, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements.
    Such forward-looking statements are based on numerous assumptions
regarding Rio Tinto's present and future business strategies and the
environment in which Rio Tinto will operate in the future. Among the important
factors that could cause Rio Tinto's actual results, performance or
achievements to differ materially from those in the forward-looking statements
include, among others, levels of actual production during any period, levels
of demand and market prices, the ability to produce and transport products
profitably, the impact of foreign currency exchange rates on market prices and
operating costs, operational problems, political uncertainty and economic
conditions in relevant areas of the world, the actions of competitors,
activities by governmental authorities such as changes in taxation or
regulation and such other risk factors identified in Rio Tinto's most recent
Annual Report on Form 20-F filed with the United States Securities and
Exchange Commission (the "SEC") or Form 6-Ks furnished to the SEC.
Forward-looking statements should, therefore, be construed in light of such
risk factors and undue reliance should not be placed on forward-looking
statements. These forward-looking statements speak only as of the date of this
announcement. Rio Tinto expressly disclaims any obligation or undertaking
(except as required by applicable law, the City Code on Takeovers and Mergers
(the "Takeover Code"), the UK Listing Rules, the Disclosure and Transparency
Rules of the Financial Services Authority and the Listing Rules of the
Australian Securities Exchange) to release publicly any updates or revisions
to any forward-looking statement contained herein to reflect any change in Rio
Tinto's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based.
    Nothing in this announcement should be interpreted to mean that future
earnings per share of Rio Tinto plc or Rio Tinto Limited will necessarily
match or exceed its historical published earnings per share.
    Subject to the requirements of the Takeover Code, none of Rio Tinto, any
of its officers or any person named in this announcement with their consent or
any person involved in the preparation of this announcement makes any
representation or warranty (either express or implied) or gives any assurance
that the implied values, anticipated results, performance or achievements
expressed or implied in forward-looking statements contained in this
announcement will be achieved.

    %SEDAR: 00002722E




For further information:

For further information: Bruce C. Bone, Chairman & Chief Executive
Officer, (416) 863-7133

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LABRADOR IRON ORE ROYALTY INCOME FUND

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