The mine is estimated to contain more than 13 million ounces of recoverable gold. The commissioning of the mine belies fears that the current low prices of the yellow metal may halt further expansion of gold mining capacity.

The group has a 100 per cent owned gold mine at Peak in Autralia and a 90 per cent owned mine at Kelina in Indonesia. The Kelian mine has one of the largest gold processing plants in the world. The group also has 51 per cent interest in the Morro do Ouro mine in Brazil and 56 per cent interest in the Renco Patchway mine in Zimbabwe.

The Kelian mine, which is located close to the equator in the foothills of the central Kalimantans mountains in Indonesia, achieved record mine production, plant throughout and gold output and thus increased Rio Tinto's share by nearly seven per centto 436,000 ounces. The impressive performance was achieved despite the effects of El Nino which contributed smoke, haze and drought in East Kalimantan.

By the middle of 1997 the new gold mine at Lihir was ready for processing oxide ore as scheduled and by the end of the year the commissioning of the whole complex was well under way and sulphide ore was being treated in the plant.

The plant is already on stream and its first year production is placed at 212,000 ounces of which Rio Tinto's share might be around 36,000 ounces.

At Morro do Ouro in Brazil, a $47 million expansion was completed below budget and ahead of schedule in late 1997.

However, metallurgical difficulties during commissioning, combined with higher than usual inventory of gold in the hydrometallurgical plant, caused overall production to fall almost five per cent reducing Rio Tinto's share to 80,000 ounces of gold.

Lower gold grades at the Peak mine in Australia resulted in a three per cent decrease in production to 148,000 tonnes.Following the August 1997 closure of the Brompton mine due to declining gold grades, Rio Tinto Zimbabwe's gold production was down four per cent from the previous year, the group's share was nearly 43,000 ounces of gold.

Though gold bugs have been predicting closure of mines if prices remained below $300 per ounce, such fears have not come true. Production costs of some new mines are said to be well below that level.