Miner Becomes Farmer as Rio Tinto Forays into Hay Production in Pilbara

With global commodity prices of iron ore and coal at record-low levels, mining giant Rio Tinto (ASX: RIO) has apparently forayed into the agriculture to seek other sources of income outside the once very profitable resources sector.

Rio on Thursday announced the opening of its multimillion-dollar Hamersley Agriculture Project in Pilbara. The venture aims to produce about 30,000 tonnes of hay a year.

To kick off the project, the mining firm started to plant Rhodes grass seeds covering 850 hectares of land near Tom Price. By January 2013, the area is expected to be at full capacity with the first cut likely by before Christmas of 2012.

Allan Jackson of Rio said the company plans to sell more than one-third of the hay produce to other pastoralists in the North West, particularly the six cattle stations in the area with 25,000 cattle heads.

The Rio project has the support of Western Australia Minister for Agriculture and Food Terry Redman, who said the ministry helped with the technical side of the agricultural venture by holding a 12-month trial in a similar environment.

He said that while it is probably the first time any significant investment on agriculture has been made in the Pilbara region, the early stages of the trials indicate the potential is substantial. The minister said only water is needed to make something grow in Pilbara soil.

"Some of the biggest and best foods producing areas are in the most inhospitable environments, in North Africa and Israel and the like and those areas are very similar to the Pilbara," ABC quoted Mr Redman.

Rio's foray into agriculture was the result of the miner's discovery of 35 gigalitres of water a year which the Pilbara water table at Marandoo will release from the ground as part of Rio's $1.2 billion expansion in Marandoo located near the Karijini National Park.

Since Rio could not dump that much water into the park's waterway because it would destroy fragile grasslands and fauna the national park supports.

Mr Redman turned on the tap at the haymaking pioneering project on Wednesday of the $140-million sprinkler system to make the region's red earth fertile breeding grounds for grass.

To draw the water from the water table, Rio Tinto would dig up to 180 metres below the surface of the earth. The system is made up of 35 kilometres of pipeline, 22 pumps and 17 pivots which will spray up to 7.5 million litres of water a day. The drenching is equivalent to 13.6 millimetres in 24 hours.