Cape Alumina Reviews $320 Million Project on Tighter Environment Controls

Cape Alumina Ltd., an Australian bauxite developer, is reviewing its A$380 million ($320 million) Pisolite Hills bauxite mine and port project after the Queensland state government tightened environmental controls.

“We are concerned for the future of the project,” Paul Messenger, managing director of the Brisbane-based company, said today in an interview by phone. The project in its existing planned state is now “no longer viable,” he said in a statement earlier today.

Cape Alumina had planned to complete an environmental study by next month to start construction in 2012. The Queensland state government today restricted new development activities that may degrade the natural values of the Wenlock River Basin.

The Pisolite Hills project would have created more than 1,700 jobs over the mine’s 15-year life, Cape Alumina said April 13. The company would now need to review the project’s economic viability, it said in today’s statement.

Rio Tinto Group’s Weipa bauxite mine lease is also located in the Wenlock River Basin.

“There is no immediate impact on the Rio Tinto Alcan Weipa mine operation in the short term,” said Rio Tinto Alcan spokeswoman Diane Collier in an e-mailed statement. “Any potential long term impacts from today’s announcement have already been factored into our forward looking statements and plans.”

Mining Leases

Weipa last year produced 16,235 metric tons of bauxite, a raw material used to produce aluminum.

“To gain approval for any mining leases in Queensland, companies have to undertake a rigorous Environmental Impact Assessment, and this remains the case for any mining leases applications in the declaration area,” Queensland Minister for Natural Resources Stephen Robertson said in an e-mailed statement.

“It is up to the companies to determine if they still wish to pursue mining lease applications for the remaining area they have been exploring in,” Robertson said.

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

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