SYDNEY, May 11 (Reuters) - Rio Tinto (RIO.AX)(RIO.L) has cleared a key environmental hurdle in its plan to boost capacity at its Cape Lambert iron ore port, but the project faced uncertainty due to the new mining tax, the firm said on Tuesday.
The Western Australian state Environmental Protection Authority has given the Pilbara district project, estimated by analysts to cost more than $10 billion, approval to boost capacity by 62 percent to 130 million tonnes from 80 million now.
The authority's clearance, subject to a two week appeal process, was a "very important step" in meeting its production target of 330 million tonnes in 2015, a Rio spokesman said.
The project faces further environmental scrutiny before construction could start and Rio's board has yet to give its final investment approval for the work.
The spokesman declined to comment on Rio's own cost estimates.
But he said Rio was assessing the implications of a 40 percent tax on mining profits proposed by the Australian government last week before committing to further capital spending on projects, including the Cape Lambert expansion.
Rio and other Australian miners producing everything from natural gas to copper and zinc have been forced to rethink new projects in the face of the tax -- the world's stiffest on mining companies -- starting in 2012.
The mining sector is fighting to overturn the levy ahead of elections expected late this year, with the incumbent centre-left Prime Minister Kevin Rudd suffering a reversal in the polls after the tax and a series of policy backdowns.
BHP Billiton (BHP.AX) (BLT.L) Chief Executive Marius Kloppers has warned that Australian projects could be cancelled under the new tax regime, though $116 billion iron ore joint venture partnership being sought with Rio to save $10 billion through synergies had not been derailed.[nSGE64900M].
The environmental authority found a new port at Cape Lambert adding 50 million tonnes more capacity could be built under acceptable levels of impact if special conditions were met.
Despite the approval, the authority acknowledged in its report the new port would impact flatback turtle rookeries and that noise pollution could be deadly to some marine creatures.
Rio Tinto in November 2007 applied to expand the port.
A second nearby port, at Dampier, has a capacity of 140 million tonnes and is being incrementally expanded by a further 10 million tonnes.
The expansion at Cape Lambert would include the development of new mines and railroads leading to the Indian Ocean port and longer term involves adding a further 50 million tonnes of capacity, taking total capacity to 330 million tonnes, according to the spokesman
The 500,000-square-km Pilbara district is undergoing an unprecedented rate of mine development, straining limited export berthing space.
Plans to triple berthing capacity at the Port Hedland inner harbour iron ore export terminal used by BHP to 440 million tonnes annually within four years to accommodate growing freighter traffic will be followed by new outer harbour berths.