Sinosteel, Rio Tinto agree to extend iron ore JV
Shanghai. December 6. INTERFAX-CHINA - Major domestic iron ore trader Sinosteel Corp. and Australian iron ore giant Rio Tinto Ltd. announced Dec. 3 they have agreed to extend the lifespan of their Channar mining joint venture (JV).
According to Sinosteel, the JV now aims to produce a total of 50 million tons of iron ore from 2012 to 2017 rather than disbanding in 2012 as originally planned.
The project began in 1987 and was scheduled to end in the second quarter of 2012 when it had produced a total output of 200 million tons.
Located in Western Australia's Pilbara region, the JV has an annual iron ore output of 10 million tons. It represents China's first major investment in the Australian mining industry, with Sinosteel holding a 40 percent stake and Rio Tinto the remaining 60 percent.
Extension talks began in 2004 but stalled soon after. Domestic media reported that Sinosteel would not agree to Rio's propose price hike of $10 per ton.
Umetal analyst Hu Kai told Interfax that continued cooperation will benefit both sides.
"The two parties have a well-established relationship following their long-term collaboration", said Hu.
"Rio Tinto also has a number of underdeveloped resources," Hu added. "With China as Rio Tinto's single largest buyer, the Australian company will likely seek further cooperation with Sinosteel on new projects."