Rio Tinto and China’s Sinosteel Corp. have agreed to extend their historic Channar Mining joint venture. This third extension of the joint venture, confirmed in Beijing by Rio Tinto Chief Executive J-S Jacques and Sinosteel Chairman Xu Siwei, will see an additional 10 million metric tons (mt) of iron ore delivered into the joint venture from Western Australia.
The Channar joint venture, owned 60% by Rio Tinto and 40% by Sinosteel, includes the Channar mine in the Pilbara region of Western Australia. The mine is managed by Rio Tinto and the agreement provides Sinosteel with off-take rights for a volume of Pilbara Blend (into which Channar ore feeds) equivalent to Channar production.
“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 Chris Salisbury, chief executive-iron ore for Rio Tinto. “This extension represents another milestone in our 30-year partnership that has seen more than 250 million mt of iron ore delivered from the Pilbara to China.”
The extension includes an upfront payment of $15 million from Sinosteel to Rio Tinto, as well as production royalties linked to the iron ore price. It is conditional upon approvals from the Western Australian, Australian and Chinese governments.
The original 200-million-mt Channar JV was signed in 1987. This third extension will increase the life of the joint venture to cover production totaling 290 million mt.