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Rio Tinto and Baowu Agree to Form Joint Venture to Develop Western Range

Rio Tinto (54 per cent) and China Baowu Steel Group Co. Ltd (Baowu) (46 per cent) have agreed to enter into a joint venture with respect to the Western Range iron ore project in the Pilbara, Western Australia, investing $2 billion ($1.3 billion Rio Tinto share1) to develop the mine.

Benzinga · 09/13/2022 19:57
Rio Tinto (54 per cent) and China Baowu Steel Group Co. Ltd (Baowu) (46 per cent) have agreed to enter into a joint venture with respect to the Western Range iron ore project in the Pilbara, Western Australia, investing $2 billion ($1.3 billion Rio Tinto share1) to develop the mine. Western Range's annual production capacity of 25 million tonnes of iron ore will help sustain production of the Pilbara Blend from Rio Tinto's existing Paraburdoo mining hub. The project includes construction of a primary crusher and an 18 kilometre conveyor system linking it to the existing Paraburdoo processing plant. Construction is expected to begin in early 2023 with first production anticipated in 2025. The construction phase will support approximately 1,600 jobs with the mine requiring about 800 ongoing operational roles which are expected to be filled by existing workers transitioning from other sites in the Paraburdoo mining hub. Rio Tinto's share of the capital costs are already included in the Group's capital expenditure guidance of around $9-10 billion for each of 2023 and 2024. Both parties will pay their portion of capital costs for the development of the mine, and mine operating costs, plus a nominal ongoing resource contribution fee calculated by reference to Western Range production volumes. There is no upfront consideration being paid by either party. Rio Tinto and Baowu have also agreed to enter into an iron ore sales agreement at market prices covering a total of up to 126.5 million tonnes of iron ore over approximately 13 years (together with the joint venture, the "Transaction"). This volume represents Baowu's 46 per cent interest in the anticipated 275 million tonnes of production from Western Range through the Joint Venture.