AusGroup announced Tuesday its construction, integrated services and fabrication company AGC Industries has been chosen to construct a low grade pilot plant at the Rio Tinto-operated Brockman 4 mine site located in the Pilbara region, Western Australia.

Under the agreement, AGC will cover the design, installation, construction and commissioning of the low grade iron ore pilot plant which is scheduled to commence production in February 2012.

The construction of the plant at Brockman 4 will allow resource giant Rio Tinto to tap into large quantities of previously less-marketable, lower grade ores of relatively higher impurity – material which would otherwise be less viable to process in the traditional way.

The addition of this plant will allow Rio Tinto Iron Ore to conduct large scale testing for future lower grade feed types while also providing valuable information to enhance the ore output from the Brockman site.

“The Brockman site is of significant importance for Rio Tinto’s 333 Mt/a expansion target and for AGC,” said Stuart Kenny, AusGroup Acting Managing Director and CEO.

“This contract award underlines the excellent relationship we have built with Rio Tinto, while demonstrating our ability to deliver construction projects using local resources.

Our increasing growth in both capability and experience will enable the safe and effective delivery of this contract, while maintaining our Perfect Day safety philosophy.”

The Brockman 4 Iron Ore mine is an open pit operation with site-based processing facilities capable of extracting 22 million tonnes of ore annually.

With this contract award, AusGroup’s order book now stands at AU$330 million.