Despite the uncertainly over Australia's proposed super mining tax, based on the hung parliament following the elections held on August 21, Rio Tinto, the world's second largest iron ore exporter has given the green light to their iron ore joint venture with Hope Downs Iron Ore owned by Australia's richest lady, Gina Rinehart.
This decision may come as a bit of a surprise after Rio Tinto's chief executive put all of their Australian investments under scrutiny in May following the announcement of then Prime Minister Kevin Rudd's proposed mining super tax program.
The Hope Downs 4 mine, located in the Pilbara region in Western Australia will see the both joint venture partners splitting the estimated US$1.2 billion capital costs equally.
It will consist of an open cut mine that will produce up to 15 million tonnes of high grade iron ore per annum, with the first shipment due in 2013.
Rio Tinto will commit an additional $425 million to the project, bringing its' expected cost to US$1.6 billion. This additional spend will cover the capital cost of rail, rolling stock and power infrastructure owned by Rio Tinto. A new rail line will be built to link the Hope Downs 4 mine to the existing Lang Hancock rail line that links their existing mine to port infrastructure.
Construction on the new mine is expected to commence in early 2011.