Rio Tinto
A train loaded with iron ore travels towards the Rio Tinto Parker Point iron ore facility in Dampier in the Pilbara region of Western Australia April 20, 2011. Reuters/Daniel Munoz

Mining giant Rio Tinto has awarded contracts worth $1.38 billion for the development of the Amrun bauxite mine project. Of these, Queensland suppliers have received nearly two-thirds, amounting to $900 million, of the contracts. More than 500 companies have been associated with the project in the state.

The project, in Cape York Peninsula, includes the development of a mine, processing plant and bauxite stockpiles, warehouses, a power station and new barge, ferry and ship loading facilities. It is expected to substitute the East Weipa bauxite mine.

The volume of bauxite to be exported from Cape York following the development of the mine is forecast to surge by nearly 10 million tonnes a year. Production and shipping is expected to kick-off in the first half of 2019.

For a firm to bid for a contract worth more than$1 million with Rio Tinto, it needs to complete a Local and Indigenous Participation Plan. This is required to be submitted during the bidding process. When the firm secures the contract, it then needs to report the performance of their contractors.

According to Queensland Premier Annastacia Palaszczuk, Rio Tinto’s investment would greatly aid the state’s economy. “Rio Tinto’s significant investment in local and regional suppliers will provide a tremendous boost to the economy of Queensland,” Palaszczuk said. “The Amrun project will ensure Queensland businesses and their employees will continue to reap the benefits of many development opportunities for years to come. It is a best practice example of encouraging local and Indigenous participation with substantial employment targets already agreed with many key suppliers.”

Currently, 1,600 workers are employed at the site. Of these, more than 75 percent are natives of Queensland. Additionally, seven of 10 workers are new to Rio Tinto.

“Sustainability is crucial to this project and strict guidelines are in place for all suppliers,” Rio Tinto chief executive Jean-Sébastien Jacques said. “They must demonstrate they are commercially competitive, technically competent and most importantly, align with the safety standards of our group,” he said. “Rio Tinto is a substantial contributor to the Queensland economy paying $1.3 billion in state taxes and royalties over the past 5 years.”

Rio Tinto has received a consensus “Hold” rating by 21 research firms that are covering the stock. Of these, one equities research analyst has given the mining company a sell recommendation, nine have issued a hold recommendation and 11 have rated it with a buy recommendation.