Rio Tinto will invest $310 million to assure a sustainable water supply for its iron ore operations in the Pilbara region of Western Australia, ensuring a sufficient resource to accommodate the expansion of annual production capacity up to the planned 333 Mt/y. The coastal water supply project, which involves construction of a new borefield and pipeline system, will be completed by mid-2013, coinciding with the first ore from the planned increase in production capacity to 283 Mt/y.

Rio Tinto will build, own and operate the new borefield, located in the lower Bungaroo Valley, 35 km southeast of the town of Pannawonica, with an annual capacity of 10 gigalitres.

Under the proposal, which has been agreed in principle with the Government of Western Australia, Rio Tinto will surrender its existing priority entitlements to the Millstream water supply, the system Rio Tinto constructed and financed 40 years ago. In return, the Government has agreed to amendments to secondary processing obligations.

Rio Tinto chief executive, Iron Ore and Australia, Sam Walsh said “The decision is a major boost to our operational capability and an important investment to support our Pilbara expansion. We will ensure the future reliability of our water supply without any interruption to current operations.

“This decision will provide significant benefits for the communities of the Pilbara region and represents a huge vote of confidence in the coastal communities of Dampier, Karratha, Wickham, Roebourne and Port Samson – towns for which Rio Tinto has supplied critical infrastructure since the Pilbara was developed. By freeing up water supply for our growing communities this project will support the Government’s ‘Pilbara Cities’ initiative”.