Rio Tinto says the HIsmelt pig iron plant in Western Australia will close due to depressed global pig iron prices and a poor market outlook.
The plant, which smelts high phosphorous iron ore fines and non-coking coal to produce a premium grade iron product, will be placed on care and maintenance for 12 months to April 2010.
"This is a tough decision, but unfortunately one that relates directly to the current market conditions and the uncertainty of a market recovery in the near term," Rio Tinto iron ore chief executive Sam Walsh said in a statement.
The plant has been operating since 2006.
The plant, which is at Kwinana on the southern outskirts of Perth, is 60 per cent owned by Rio Tinto, with Nucor Corporation, Mitsubishi Corporation and Shougang Corporation holding the balance.
"We retain every confidence in the viability of the HIsmelt technology, which is proven and successful, and we remain hopeful for an upswing in the market to enable a restart in the future,'' Mr Walsh said.
Rio Tinto said a team of full-time employees would be retained to maintain the plant, with the remaining employees given the option of being considered for employment elsewhere in the company.
Commodity prices have sunk as demand slows amid the global economic downturn, with many producers forced to cut output and shed jobs to remain competitive.
Rio Tinto's action follows a decision by rival BHP Billiton in January to shelve its Ravensthorpe nickel mine in WA due to declining commodity prices.
Shares in Rio Tinto lost 37 cents to $53.56 by about 1pm (AEST), while BHP Billiton gained 55 cents to $33.81.
AAP
