Rio Tinto (ASX: RIO) has agreed to enter into a joint venture with China Baowu Steel Group Co. Ltd regarding the Western Range iron ore project in Pilbara, WA. Under the joint venture, both companies will invest AU$2.0 billion (AU$1.3 billion Rio Tinto share) to advance the mine. The yearly production volume of 25 million tonnes of iron ore from the Western Range iron ore project will support the production of the Pilbara Blend from Rio Tinto’s previous Paraburdoo mining hub. The project comprised the construction of the main crusher and an 18-kilometer conveyor system connecting it to the previous Paraburdoo processing plant.
The construction work is likely to start in early 2023, with the first production forecasted in 2025. Both companies have also signed a sales contract at market prices for a total of up to 126.5 million tonnes of iron ore over a period of 13 years. This volume denotes Baowu’s 46% stake in the expected 275 million tonnes of production from the iron ore project via the Joint Venture.
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