Rio Tinto is extending its 30-year iron ore Channar Mining Joint Venture with China’s Sinosteel Corp.
The third extension of the agreement will see an additional 10 million tonnes (Mt) of iron ore delivered into the JV from Western Australia.
Sinosteel will make a $US15 million ($19.7 million) upfront payment, as well as production royalties linked to the iron ore price, as part of the new agreement.
The latest extension to the JV will increase its life to cover production of 290Mt of iron ore.
Rio Tinto Iron Ore chief executive Chris Salisbury said the JV was one of Australia’s most significant trading partnerships and helped pave the way for the strong relationship forged with China.
“This extension represents another milestone in our 30-year partnership that has seen more than 250Mt of iron ore delivered from the Pilbara to China,” Salisbury said.
The JV, which owns the Channar mine in the Pilbara, was signed in 1987 and has involved the production of 200Mt of iron ore.
Rio, which owns 60 per cent of the mine, manages the operation, with Sinosteel having off-take rights for a volume of Pilbara Blend equivalent to Channar production.