Rio Tinto to propose new plan after losing court battle over mine expansion

Rio Tinto to propose new plan after losing court battle over mine expansionGlobal miner Rio Tinto (ASX, LON:RIO) lost Monday a legal battle to expand its Warkworth coal mine in Australia, which the company considered key to keep its coal business healthy amid a market slump, but said it would submit new mine plans as soon as possible.

Rio had appealed an earlier ruling that found projected economic benefits of extending the mine in the small community of Bulga, 180 km north of Sydney, failed to outweigh its environmental impact.

The US$557 million expansion of Rio’s Warkworth open-cut mine had been in limbo since the New South Wales Land and Environment Court ruled last year it would threaten endangered ecological areas and adversely affect residents of the nearby town of Bulga.

Rio’s Coal & Allied managing director, Chris Salisbury, said in a statement that the company remained committed to securing new approvals to “provide a long term future for Mount Thorley Warkworth mine and the jobs of its 1300 workers.”

"Our current approvals will only allow Mount Thorley Warkworth to maintain existing production and employment levels until the end of 2015. It is essential we secure longer term approvals before then to ensure the mine remains economically viable,” he added.

Australia’s coal industry is struggling with a supply of the commodity and China’s cooling economic growth. Over 11,000 coal mining jobs have been lost since late last year as giants such as Rio Tinto itself, BHP Billiton (ASX: BHP), Glencore Xstrata (LON: GLEN) and Brazil’s Vale (NYSE:VALE) have been cutting costs and closing down non-core divisions.

The Warkworth open-pit operation is part of a larger mining complex producing about 12 million metric tons a year of thermal and coking coal for the local market and customers in Asia.

Coal & Allied is 80% owned by Rio Tinto and 20% by Japanese trading company Mitsubishi Corp.

Image by Jeremy Buckingham MLC