Mining giant Rio Tinto (ASX: RIO) and China’s Sinosteel Corporation have agreed to extend their Channar Mining Joint Venture in Western Australia.
This is the third extension of the joint venture and it will see an additional 10 million tonnes of iron ore delivered into the joint venture from Western Australia.
Rio Tinto Iron Ore chief executive Chris Salisbury said the Channar joint venture is one of Australia’s most significant trading partnerships and has helped pave the way for the incredibly strong relationship we have forged with China today.
This extension represents another milestone in our 30-year partnership that has seen more than 250 million tonnes of iron ore delivered from the Pilbara to China.”
The extension will see Sinosteel make an upfront payment of US$15 million to Rio Tinto as well as production royalties linked to the iron ore price. It is conditional upon approvals from the Western Australian, Australian and Chinese governments.
The original Channar joint venture was signed in 1987 and provided for the production of 200 million tonnes of iron ore. This third extension will increase the life of the joint venture to cover production totalling 290 million tonnes.
The Channar joint venture (Rio Tinto share 60 per cent, Sinosteel share 40 per cent) owns the Channar mine in the Pilbara region of Western Australia.
The mine is managed by Rio Tinto and the joint venture agreement provides Sinosteel with off-take rights for a volume of Pilbara Blend (into which Channar ore feeds) equivalent to Channar production.