Cazaly-Fortescue Duel with Rio Tinto

Submitted by Craig Strzelecki on 19 June, 2008 - 11:25

Cazaly Resources share prices soared at the Australian stock exchange after its announcement to team up with Fortescue Metals to mine the iron in Pilbara region in Western Australia. It has obtained the documents for renewal process of the land by Rio Tinto under the Freedom of Information Act. It now claims that there are several defects in the renewal process that leaves the land open for rights to occupancy. However, Rio Tinto has strongly objected to any such allegations.

The Rhodes Ridge area is currently assumed to be leased with Rio Tinto, Hancock Prospecting and Wright Prospecting. Cazaly Resources need to successfully gain full control of the area by proving that Rio Tinto had erred while renewing its lease for the region and the area is free for pegging by third parties.

This has forced Rio Tinto to reveal its plans for the development of controversial Rhodes Ridge and Shovelanna iron ore treatment in West Australia. The Shovelanna region had remained undeveloped since past 30 years. Moreover, there had been no mention in Rio Tinto's plans for developing the Pilbara region. Now for the first time Rio has revealed that its projects included development of pipeline of its long term plans.

The revelation came in front of Australia's crème de la crème financial resources community. According to industry experts, Rio had so far been revealing its short term projects about Yandicoogina and Brockman assets. However, it denied that its revelation of plans came in defence of accusations by Cazaly and Fortescue about the company sitting on "warehoused" deposits or iron ore in Pilbara. Rio further went on to accuse Cazaly and Fortescue to undermine security of land tenure in West Australia.

On the other hand, Fortescue Metals announced that it is ready to pay $100 million upfront to Cazaly Resources if it successfully proves its ownership for the Rhodes Ridge land. It also promised to develop the land faster than Rio Tinto had been able to do in past or as promises to develop in coming years.

The current scenario seems like David taking the Goliath and Rio cannot afford to open flood gates to any small mining company to take away nearly 4 billion tonnes of iron ores from under its nose. Industry experts say that Cazaly Resources must have something to its credit as it has made is this far to get a hearing in front of WA Warden's Court.

The share prices of Cazaly Resources have already sky rocketed at the stock exchange. They closed day up at 60 percent or 19.5 cents to 52 cents after touching its record day's high of 70 cents. Fortescue shares also closed days up 52 cents to $10.97.