Fortescue and Baosteel have announced a merger of some of their iron ore assets.
Under an agreement signed yesterday the two companies will consolidate their interests in the Northstar and Glacier Valley mining leases into FMG Iron Bridge.
Following the completion of the merger Fortescue will own 88% and Baosteel the remaining 12% of the entity, which is a Hong Kong based subsidiary of Fortescue.
Northstar – previously fully owned by Fortescue, and Glacier Valley – which was split 65% FMG to 35% Baosteel, contain magnetite deposits that have a JORC compliant resource of 3.2 billion tonnes.
Fortescue CEO Nev Power explained that "this agreement consolidates one of the world's most prospective magnetite projects taking into account its massive scale and close proximity to both customers and rail and port infrastructure".
The actual merger is still subject to approvals by the Australian Foreign Investment Review Board and the Chinese State-owned Assets Supervision and Administration Commission.
This is the second major agreement the miner has made with another iron ore company.
Earlier this year FMG signed a agreement with Iron Ore Holdings (IOH) that will see Fortescue expand its Nyidinghu project into IOH's tenements.
According to IOH the memorandum between the two miners gives Fortescue an option until 31 March 2013 to obtain a licence to mine the Iron Valley, which is continguous to FMG's Nyidinghu deposit, which extends into the valley.
Nev Power said with more than two billion tonnes of iron ore resource already identified at Nyidinghu, the project is large scale and core part of the miner's plan to expand production beyond 155 million tonnes per annum.
Fortescue Metals Group has increased its total iron ore resource to11.42 billion tonnes after delineating two billion tonnes at its new Nyidinghu project.