Rio Tinto Extends Historic Joint Venture Agreement with Sinosteel
The Channar joint venture extension and a separate agreement signed with Sinosteel Corporation to supply iron ore from the Pilbara region, will boost Rio’s sales of up to 70 million tonnes of iron ore over the next five years.
The Anglo-Australian miner Rio Tinto Plc (ASX:RIO) announced the extension of the Channar Joint Venture partnership with Sinosteel Corporation in the Pilbara region.
This joint venture extension and a separate agreement signed with Sinosteel Corporation to supply iron ore from the Pilbara region, will boost Rio’s sales of up to 70 million tonnes of iron ore over the next five years.
The company will supply 30 million tonnes of iron ore into the joint venture and Sinosteel will pay US$45 million as a one-off payment along with additional production royalties associated with the iron ore price.
A separate agreement that has been signed with Sinosteel will see Rio supplying up to 40 million tonnes of iron ore between 2016 and 2021.
Rio Tinto Iron Ore Chief Exectutive Mr. Andrew Harding commented on the extension of the historic joint venture: “In the 50 years that we have been exploring iron ore from the Pilbara, the Channar joint venture stands out as one of the most important deals not only for our business, but for Australia’s economic ties with China. Now in its 30th year, it is one of the longest running and most successful partnerships between the two nations. We place immense value on our long-term customer relationships and today’s agreements clearly demonstrate that Rio Tinto and Sinosteel remain committed to our mutually beneficial partnership.”
Sinosteel Corporation’s President Liu Andong reciprocated Mr. Harding’s remarks: “The Channar Mining Joint Venture was the first large-scale mining initiative between our two countries and is a cornerstone of Chinese and Australian trade. The extension of the joint venture marks another milestone in trade cooperation, especially in the current economic climate.”
Background of Channar Joint Venture
The Channar joint venture was initially signed in 1987 with the support of Australian and Chinese governments. Rio Tinto has 60% share and Sinosteel controls the remaining 40% of the Channar mine in the Pilbara region. Rio Tinto is the manager of the mine and the JV agreement enables Sinosteel with off-take rights for a volume of Pilbara Blend proportionate to Channar production.
Author: Kaivalya Kandarpa
Apr 15, 2016
Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.