Premier Colin Barnett has told Rio Tinto and Alcoa that they're dreaming about developing a massive bauxite deposit in the remote Kimberley and flagged the possible return of the resource to taxpayers.
The global giants want a two to three year extension and an associated State Agreement over the big bauxite deposit which is surrounded by national parks 115 kilometers South West of Kalumburu.
The Government must decide on the push by the end of this month under the Alumina Refinery (Mitchell Plateau) Agreement Act 1971, which grants the right to develop the bauxite reserves as long as the companies build an alumina refinery in the region.
Mr Barnett signalled a shift in the Government's thinking, just days after it moved to ban mining around Horizontal Falls near Derby. There has been some discussion with Rio).
Mr Barnett said that "Rio and Alcoa still hold the entitlement, and the agreement basically requires that they provide updates on their proposals. I have told them I expect them to comply with the Agreement Act but there is no serious plan to go ahead with development there and in fact I'll say I don't think the bauxite resource will ever be developed."
Mr Barnett said while asking whether this represented a permanent block and Rio should consider handing the resource back to the State, that "That might be an option in the future. There have been all sorts of plans. It is remote. I don't know it is that great a resource."
It is understood neither Rio (65%) nor Alcoa (35%) believes the project is viable in its present form, despite aluminium prices recovering above financial crisis lows. Rio continues to spend time and money on the project, in keeping with the requirements under the Act and its infrastructure in the area such as its airstrip is used by tourist operators.
Some analysts speculate Rio's persistence is in the hope that the WA Government would eventually relent on the requirement to build a costly refinery and allow it to simply mine the bauxite, giving it an alternative to the Queensland Weipa bauxite mine, which underpins all of Rio's aluminium operations. The global mining giant is currently struggling to extend the life of that mine amid environmental and cost issues. Rio's general manager of external relations Mr Andy Munro was diplomatic when asked about the snub.
He said that "We understand the rules relative to the State Agreement Act. We have submitted an application to extend the time by which we need to put in a development proposal and it is presently sitting with the Government. Notwithstanding Mr Barnett's stance, the Kimberley bauxite deposit also presents challenges due to its isolation and pristine ecosystem. There is little existing infrastructure and an alumina refinery would require huge volumes of water and electricity.”
