Oh well, I became bored...
Nothing like Googling around for high school physics that I'm foggy on to say the least.
Anyway, specular reflection can occur with most any surface, given that it is either naturally "smooth enough" or if something (water) fills in the otherwise rough surface. Heck, paper exhibits some specular properties, as anyone who has tried to read with a high intensity lamp can attest. Below is a good link for more information and this quote which goes along with what I just said.
There are several interesting applications of this distinction between specular and diffuse reflection. One application pertains to the relative difficulty of night driving on a dry asphalt roadway compared to a wet asphalt roadway. Most drivers are aware of the fact that driving at night on a wet roadway results in an annoying glare from oncoming headlights. The glare is the result of the specular reflection of the beam of light from an oncoming car. Normally a roadway would cause diffuse reflection due to its rough surface. But if the surface is rough, water can fill in the crevices and smooth out the surface. Rays of light from the beam of an oncoming car hit this smooth surface, undergo specular reflection and remain concentrated in a beam.
Back to that FarCry beach. The rocks could be wet...I mean it is a beach, right? Even if the rocks are not wet...why be so hellbent about the likelihood of that being a hemitite covered beach or not? What's the big deal? The last time I checked there are countless liberties with physics, visual properties, physiology, etc, etc, etc that game developers take...they are games afterall.