AusBN - Rio Tinto (ASX:RIO) and China’s Sinosteel Corporation have agreed to extend their historic Channar Mining Joint Venture, an agreement which was first inked back in 1987.
Under the extension, an additional 10 million tonnes of iron ore will be delivered into the JV from Rio’s Channar mine in Western Australia’s Pilbara region.
The original agreement provided for the production of 200 million tonnes (Mt) of iron ore, a chief steel-making ingredient, while the third extension will increase production to 290Mt.
The Channar operation is 60% owned and managed by the Australian mining giant, with Sinosteel taking the remaining 40% and rights to volumes of ore from the Pilbara.
Sinosteel will make an upfront payment of US$15 million to Rio, along with production royalties linked to the iron ore price.
“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,” said Rio’s iron ore chief executive Chris Salisbury.
“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.”