Rio Tinto"s iron ore operations during the last year have been characterised by fast track development of simultaneous projects across mines, rail and ports. In its annual review of operations, Rio Tinto reported that capacity increases were achieved in a very tight market, with resources fully stretched and significant cost escalation pressures.

Development projects were achieved with less than one per cent of lost time resulting from industrial disputes. Large price increases for iron ore sales were also achieved, up 71.5% in 2005 and additional supply is anticipated through a new joint venture being progressed for the development of the Hope Downs deposits in the East Pilbara.

The Expansion Projects group, formed in 2003 to manage the combined US$1.6 billion of expansion projects across the Western Australian iron ore operations, continued to increase the capacity of the business, delivering a number of projects on budget and ahead of schedule.

Projects to increase the capacity of Hamersley Iron's Yandicoogina mine from 24 to 36 million tonnes and Robe River 's West Angelas mine from 20 to 25 million tonnes were completed ahead of schedule in the third quarter. Robe also shipped the 50 millionth tonne of West Angelas ore.

The duplication of 100km in two sections of the main Pilbara rail line progressed, with the southern section completed well ahead of schedule in mid-November. The northern section is on target to be completed ahead of schedule and within budget in this quarter to meet the 150 million tonnes per annum main line railing rate.

Work to connect the Hamersley and Robe power systems resulted in a new substation at Millstream commissioned in September to allow up to 40 megawatts to be transferred between the systems. The Dampier port upgrade to 116 million tonnes was completed, with the first ore from the new shiploader shipped in September 2005.

Rio Tinto has committed US$290 million to expand Hamersley's existing Mount Tom Price and Marandoo mines and construct new mine facilities at Nammuldi. Supporting these expansion projects was a new Tom Price residential subdivision which was started during 2005.

In October, US$530 million was committed to further expand the Yandicoogina mine from 36 to 52 million tonnes making it the largest in the Pilbara. An additional US$690 million was committed for a further expansion of the Dampier port, increasing capacity from 116 to 140 million tonnes. At the completion of the stage two expansion, Rio Tinto's Pilbara port capacity will approach 200 million tonnes by end 2007.

Environmental issues such as dust and noise are being managed as part of an ongoing community consultation program across the port operations. A number of environmental improvements are proceeding at the Dampier port in parallel with expansion work. These improvements, totaling US$28 million, and the decommissioning of redundant equipment are part of the next phase of upgrade works at the port.

Additional rolling stock and associated infrastructure costing US$113 million has also been committed during 2005, taking Rio Tinto's committed expansion program to US$3 billion at year end. All of the capacity expansion programs are underwritten by long term sales contracts.

Work is progressing on the details of the 50:50 joint venture agreement with Hancock Prospecting Pty Limited for the development of the Hope Downs 1, 2 and 3 and East Angelas 1, 2 and 3 deposits. The detailed feasibility study work was completed last year and a number of studies are currently under way looking at infrastructure to support the development of the Hope Downs mine, including the expansion of the port at Cape Lambert .