Posted on 15 Sep 2022
Rio Tinto and China Baowu Steel Group Co. Ltd (Baowu) are to establish a new joint venture to develop the Western Range iron ore project in Western Australia's Pilbara region, with a total investment of US$2 billion ($1.3 billion by Rio Tinto), according to a statement released by the Anglo-Australian miner on September 14. The JV will be held 54% by Rio and the balance by Baowu.
When commissioned, the Western Range mine will boast an annual production capacity of 25 million tonnes of iron ore and will help sustain production of the Pilbara Blend from Rio Tinto's existing Paraburdoo mining hub.
The project will include construction of a primary crusher and an 18-km conveyor system linking it to the existing Paraburdoo processing plant, Rio noted. Construction work is expected to begin in early 2023 with first production anticipated in 2025, the company release noted.
Meanwhile, Rio, the world's second-largest iron ore miner, and Baowu, the top steel producer globally, have also reached an iron ore sales agreement covering up to 126.5 million tonnes of iron ore over approximately 13 years (including ore from the new JV).
This volume represents Baowu's 46% interest in the anticipated 275 million tonnes of production from Western Range through the new JV.
In early 2020, Rio Tinto released its maiden proved and probable ore reserve estimate for the Western Range deposit of 201 million tonnes, grading 62.5% iron, using a cut-off grade of 58.5% iron.
Simon Trott, Rio's Iron Ore Chief Executive, was quoted in the statement as saying that "this is a very significant milestone for both Rio Tinto and Baowu, our largest customer globally. We have enjoyed a strong working relationship with Baowu for more than four decades, shipping more than 200 million tonnes of iron ore under our original joint venture, and 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. At the same time, Rio Tinto and Baowu continue to work together on low-carbon steelmaking research, exploring new methods to reduce carbon emissions and improve environmental performance across the steel value chain."
The new Rio-Baowu JV is subject to satisfaction of various conditions precedent, including approvals from Rio's shareholders, the Australian government, and Chinese government regulatory agencies, among others, the release noted.
Source:Mysteel Global
