Mining giant Rio Tinto and its Chinese partner Sinosteel Corporation have agreed to extend their Channar iron ore mining joint venture in Australia for a third time.
The third extension of the mining project in the Pilbara region of Western Australia will see production of an additional 10 million tonnes of iron ore, which is delivered for the joint venture.
As per the agreement between the partners, Sinosteel will make an upfront payment of $15m to Rio Tinto along with production royalties associated with the iron ore price.
The extension of the joint venture would be based on approvals from the Western Australian, Australian and Chinese governments.
The Channar mining joint venture came into existence in 1987 and had delivered 200 million tonnes of iron ore from the Australian mine.
According to Rio Tinto, the third extension will increase the life of the joint venture to cover production amounting to 290 million tones.
Rio Tinto Iron Ore CEO 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.”
Rio Tinto is the majority owner of the Channar joint venture which in turn owns the Channar mine. Sinosteel holds the remaining 40% stake.
Rio Tinto operates the mine and Sinosteel through the joint venture agreement is entitled to off-take rights for a volume of Pilbara Blend that would be equivalent to the production of the Channar mine. The Channar ore production is used in the preparation of Pilbara Blend.
In another development, Rio Tinto has signed a mineral exploration agreement with China-based Minmetals. The agreement will see the partners constructively and collaboratively explore and go after mineral exploration opportunities inside and outside China.
Image: Signing of the extension of the Channar mining joint venture. Photo: courtesy of Rio Tinto.