Rio Tinto and Sinosteel have extended their Channar Mining joint venture in the Pilbara.
This new agreement, together with a separate agreement for Rio to supply iron ore from the Pilbara, will allow for sales of up to 70 million tonnes annually of iron ore to Sinosteel over the next five years.
The extension itself will see 30 million tonnes of iron ore supplied into the joint venture, with Sinosteel making a one-off payment of US$45 million to Rio, and providing additional production royalties linked to the iron ore price, with Rio adding that production royalties are currently capped at US$500 million.
In a separate agreement Rio Tinto will sell up to 40 million tonnes of iron ore to Sinosteel between 2016 and 2021.
Speaking at the signing of the agreement, which hosted Australian prime minister Malcolm Turnbull and Chinese premier Li Keqiang, at the Great Hall of the People in Beijing, China, Rio Tinto head of iron ore Andrew Harding stated, “In the 50 years that we have been exporting iron ore from the Pilbara, the Channar joint venture stands out as one of the most important deals not only for our business, but for Australia’s economic ties with China.”
“Now it its 30th year, it is one of the longest running and most successful partnerships between the two nations.”
Sinsosteel president Liu Andong added,” The Channar Mining joint venture was the first large scale mining initiative between our two countries and is a cornerstone of Chinese and Australian trade. The extension of the joint venture markets another milestone in trade co-operation, especially in the current economic climate.”
Rinehart says Rio owes her and her former partner Wright Prospecting 2.5 per cent of sales from the sites over the next the life of production.
Rinehart and the Wright Family have been in dispute with Rio Tinto for more than 20 years, dating back to the 1970 agreement about the Channar and Eastern Range mines.
Both families won a $200 million lawsuit against Rio Tinto in 2013 over the rights to royalties for deposits discovered by Lang Hancock and Peter Wright.
Rio Tinto is now at risk of liability for damages in the event that the courts find in favour of Wright Prospecting.
Last month the respondent, Gina Rinehart’s Hancock Prospecting, won a ruling in the Supreme Court which will bind Rio Tinto in liability for a portion of the damages if claimed against her company.
“Hancock Prospecting claim that if (it) is liable to Wright Prospecting in the original proceedings in the respect stated, then Hamersley (Iron) is responsible for that liability or a proportion of it,” Justice Rene Le Miere said.
Hamersley Iron, Rio Tinto’s subsidiary, has also been ordered to supply documents or recordings with Wright Prospecting from between 2005 and 2010 that pertain to the disputed Hope Downs tenements.