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Australia Environment Minister Cautious Over Rio's Bauxite Expansion

05/24/2012 | 04:10am US/Eastern

Australia's federal environment minister said Thursday that he wouldn't apologize for his caution over a proposal by Rio Tinto PLC (RIO) to expand its bauxite mining operations in Queensland state.

A word of words has erupted between the Labor Party's Tony Burke and Queensland's Liberal National Party government over Rio's US$1.5 billion project, after the state gave conditional approval to the project Wednesday despite Mr. Burke's insistence that the effect of expanded shipping on the Great Barrier Reef be assessed.

"We will do what the Queensland government hasn't done, and that is make a decision that also ensures the protection of the reef," Mr. Burke said. "It doesn't matter how many times the Queensland government thumps the table and tells me they would prefer me to ignore the reef in this approval process, I won't."

Jeff Seeney, deputy premier of Queensland, a day earlier criticized the federal government for duplicating the review process for the South of Embley project on Cape York, which Rio has said would extend the life of its nearby Weipa mine by 40 years. Mr. Seeney said the federal government was holding up its review on "highly spurious grounds."

Mr. Burke, in a statement emailed by his department to Dow Jones Newswires in response to questions, said there is a large number of projects under way that would involve increased shipping through the Great Barrier Reef. "I am going to make sure that everything is assessed properly and all of the relevant impacts are taken into account," he said.

Mr. Burke's department is preparing guidelines for a revised draft environmental impact statement from Rio, having halted the process in March after receiving what he said was significant new information regarding shipping through the reef.

Rio's Alcan aluminum unit said in a community newsletter published this month that at full capacity as many as 700 ships would be loaded at the South of Embley port, but 400 of those would be headed to Asia and other markets, leaving 300 travelling each year to refineries at Gladstone. It said that in perspective, those 300 ships would represent 6% of the ships moving through Great Barrier Reef marine Park, excluding any extra ships that may be used for liquefied natural gas projects in the region.

Construction of the project had been set to begin this year, with the first bauxite shipment set for 2015. The new operation, if it goes ahead, could provide between 22.5 million and 50 million metric tons a year that would supplement declining grades at Rio's Weipa mine.

The plans include building a power station, a processing plant, warehouses and workshops, in addition to barge, ferry and ship-loading facilities.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

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