Rio Tinto Retracts Erroneous Iron-Ore Presentation Estimate

Rio Tinto Group, the world’s second-biggest mining company, said it overstated its estimated iron-ore resources in Western Australia by almost 100 percent in a presentation to financial analysts last week.

According to presentation slides shown to analysts on Oct. 9 in Perth, Rio said it controlled a “multi-generational resource with 45 billion tons of mineral inventory” in the state’s Pilbara region.

This “is not a valid classification” under the industry’s code for reporting mineral resources and reserves, London-based Rio said today in a statement to the Australian Stock Exchange. It controls 19.6 billion metric tons of iron-ore resources and 3.2 billion tons of reserves, figures compliant with the code and previously stated in its 2013 annual report.

Rio Tinto, the world’s second-biggest iron-ore exporter, rejected a July approach from Glencore for a combination that would usurp BHP Billiton Ltd. as the largest mining company. Rio is pressing ahead with an expansion of its Australian iron-ore operations to 360 million tons a year by 2017 in spite of a slump in prices to near a five-year low.

The company raised third-quarter iron-ore production 13 percent to 60.4 million tons and is on track for output of 300 million tons this year.

Rio fell 0.7 percent to 3,062.5 pence by 10:59 a.m. in London trading. It has declined 10 percent this year.

The company said it has an exploration target of 13 billion tons to 41 billion tons in the Pilbara based on an assessment of its exploration ground last year.

“However, there has been insufficient exploration and analysis to estimate a mineral resource with current levels of information so the potential quantity and quality is conceptual in nature and further exploration may, or may not result in the estimation of a mineral resource,” it said today in the statement.

(An earlier version of this story was corrected to show a larger percentage of overstatement in the first paragraph.)

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