UPDATE 1-Canadian aboriginals sue Rio Tinto unit for C$900 mln

Wed Mar 20, 2013 9:26pm GMT

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* Communities seek injunction, C$900 million damages

* Iron Ore Co of Canada has operated for more than 50 years

* Rio is considering a sale of its majority stake -sources

March 20 (Reuters) - Two Canadian aboriginal communities have filed a C$900 million ($877 million) lawsuit against a subsidiary of Rio Tinto , saying on Wednesday that more than a half century of iron ore mining has disrupted their traditional way of life.

The Innu communities of Uashat Mak Mani-Utenam and Matimekush-Lac John have asked a Quebec court for an injunction against the operations of Rio's Iron Ore Company of Canada unit in Quebec and Labrador, as well as an estimated C$900 million in damages.

Rio Tinto spokesman Illtud Harri said in an emailed statement that Iron Ore Co (IOC) has always received required governmental approvals and authorizations. "IOC will take all necessary measures to protect its rights and activities," he said.

He added that the communities involved are "important partners".

Rio, one of the world's largest mining companies, owns a 59 percent stake in IOC, Canada's largest iron ore producer. It recently hired investment banks to sell its stake, two sources familiar with the matter said in early March.

Matimekush-Lac John Chief Réal McKenzie said in the release that his community is not opposed to all mining, and has signed agreements with other companies. But the group has not been able to reconcile with IOC and Rio Tinto, he said.

In recent months, Canada's aboriginal activists have stepped up demands for more control over mining and energy projects, and a greater share of benefits from resource development.

A grass-roots aboriginal protest movement known as Idle No More staged demonstrations and blocked roads and rail lines across Canada late last year and early this year, in part to call attention to the improverished living conditions of many aboriginals, especially in remote communities.

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