Fortescue Metals Group Ltd. has entered into a non-binding memorandum of understanding (MoU) with Vale S.A. The agreement proposes the formation of one or more joint ventures for the blending of selected volumes of iron ore from both companies. The agreement also provides a framework for potential investment by Vale in Fortescue through a minority acquisition of shares on market and/or investment in current or future mining assets.

“The MoU will allow us to work together to deliver long-term value to our customers, through the efficient supply of an attractive and competitive new iron ore blend in China,” said Nev Power, CEO Fortescue.

Vale S.A is the world’s largest producer of iron ore and the third largest mining company in the world. Fortescue Metals Group exports 165 million metric tons per year of iron ore from the Pilbara in West Australia.