Rio Tinto Makes Hay From a Water Obstacle – by Rhiannon Hoyle (Wall Street Journal – October 29, 2013)

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In Australia, Miner Seeks Help From Agriculture to Drill Deeper for Iron Ore

KARRATHA, Australia—In one of the driest places on Earth, mining companies like Rio Tinto PLC are grappling with a major water problem: too much of it.

As they deplete easy-to-access deposits of iron ore in Western Australia’s mineral-rich Pilbara region, big miners are spending billions of dollars to drill deeper than ever before, vying to feed Asia’s voracious appetite for raw materials. The latest prize: vast stores of ore that lie below the water table, typically located hundreds of yards beneath the Earth’s surface.

Bringing that ore to the surface would ease fears that the global economic recovery might strain mineral supplies and trigger a sharp rebound in commodity prices, potentially damping global growth.

In the remote Pilbara, which accounts for two-fifths of the world’s iron-ore exports, brisk demand, particularly from China, is creating a challenge for both miners and environmental regulators. They need to find a way to dispose of ballooning volumes of excess water from the region’s mines without putting the surrounding environment at risk.

Rio Tinto, the world’s second-largest iron-ore producer, after Vale SA, says it thinks it has found the answer: growing hay.

The company is due to decide by year-end whether to spend $5 billion to boost its iron-ore output in the Pilbara by one-quarter, partly by delving below the water table. But it already has rejected some of the more unorthodox ideas floated for coping with excess ground water as either too costly or unlikely to use up enough of it.

The rejected proposals included building recreational water parks and breweries, and even freezing the ground—no easy feat in a region where temperatures can top 120 degrees Fahrenheit. Rio Tinto has said it gave more serious thought to bottling the water for human consumption, only to dismiss the idea because of quality concerns.

But scores of cattle graze in the region on the doorstep of Rio Tinto’s Marandoo mining operations, about a 16-hour drive from Perth, Western Australia’s coastal capital. Rio Tinto has operated farms in the Pilbara for nearly two decades to reap returns from its undeveloped land holdings.

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