Rio Tinto (54%) and China Baowu Steel Group Co. Ltd (46%) have agreed to enter into a joint venture with respect to the Western Range iron ore project in the Pilbara, Western Australia, investing a total of $2 billion to develop the mine.
Western Range’s annual production capacity of 25 million metric tons (mt) 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-km conveyor system linking it to the existing Paraburdoo processing plant.
Construction is expected to begin in early 2023 with first production anticipated in 2025.
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 mt of iron ore over approximately 13 years. This volume represents Baowu’s 46% interest in the anticipated 275 million mt of production from the Western Range through the JV.
Rio Tinto has a long history of successfully partnering and investing with customers to develop new mines in the Pilbara. Rio Tinto and Baowu’s partnership in the Pilbara dates back to the 2002 Bao-HI Joint Venture to develop the Eastern Range deposits in the Hamersley Ranges (Eastern Range) and Western Range, subject to a production cap of 200 million mt. It is now expected the production cap will be sourced entirely from Eastern Range, and this transaction will continue Rio Tinto’s relationship with Baowu through the development of the Western Range.
“This is a very significant milestone for both Rio Tinto and Baowu, our largest customer globally,” Rio Tinto Iron Ore Chief Executive Simon Trott said. “We have enjoyed a strong working relationship with Baowu for more than four decades, shipping more than 200 million m of iron ore under our original joint venture. We are looking forward to extending our partnership at Western Range.”
The development of Western Range represents the commencement of the next significant phase of investment in our iron ore business, helping underpin future production of the Pilbara Blend, the market benchmark, Trott explained
“We fully appreciate the persistent efforts of both teams in accomplishing the important achievement,” Baowu Resources Chairman Shi Bing said. “The Bao-HI JV has been successfully operating for more than 20 years, leading us to a win-win result, and reaping friendship and trust.”
Rio Tinto’s Paraburdoo hub is comprised of three operating mines, Paraburdoo, Channar and Eastern Range. The Western Range contains two deposits, 36W–50W and 55W–66W, which are located within the Hamersley Basin of Western Australia. The deposits’ mineralization is primarily hosted by the Brockman Iron Formation with additional detrital mineralization present.
The 36W–50W and 55W-66W deposits contain a measured mineral resource of 22 million mt at 59.1% Fe, indicated mineral resource of 102 million mt at 61.5% Fe, and an inferred mineral resource of 108 million mt at 61.4% Fe. The 36W–50W deposit contains a proven ore reserve of 109 million mt at 62.1% Fe and a probable ore reserve of 56 million mt at 61.7% Fe.