Global mining group Rio Tinto and China’s Baowu Steel have agreed to invest $2 billion in a new iron ore mine in Pilbara.
The venture, in which Rio Tinto will hold a 54% stake and the Chinese steelmaker the rest, will develop the Western Range iron ore project in Pilbara.
Construction will start early next year with production to start in 2025.
Rio Tinto's existing Paraburdoo mining hub will use Western Range's anticipated annual production capacity of 25Mt to produce the ‘Pilbara Blend’.
In addition, the companies entered into an iron ore sales agreement under which Baowu will purchase up to 126.5Mt over a 13-year period, equal to the Shanghai-based firm's 46% stake in Western Range.
Rio Tinto's share of capital costs has already been already included in its capex forecasts, the mining major said in a statement.
Capital costs and mine operating costs will be paid by both parties, plus a nominal ongoing resource contribution fee based on production volumes at Western Range. No upfront consideration is being paid.
“We have enjoyed a strong working relationship with Baowu for more than four decades, shipping over 200Mt of iron ore under our original JV, and we are looking forward to extending our partnership at Western Range.”
Simon Trott, chief executive of Rio Tinto Iron Ore
“We have enjoyed a strong working relationship with Baowu for more than four decades, shipping over 200Mt of iron ore under our original JV, and we are looking forward to extending our partnership at Western Range,” said Simon Trott, chief executive of Rio Tinto Iron Ore.
“At the same time, Rio Tinto and Baowu continue to work together on low-carbon steelmaking research, exploring new methods to reduce carbon emissions and improve environmental performance across the steel value chain,” he added.