Rio Tinto and Sinosteel extend Channar joint venture

FTSE 100 mining firm Rio Tinto and Chinese state-backed Sinosteel Corporation announced the extension of their Channar Mining joint venture in Australia’s Pilbara region on Friday.

Rio's board said the joint venture extension, coupled with a separate agreement for Rio Tinto to supply iron ore from the Pilbara, will enable sales of up to 70 million tonnes of iron ore to Sinosteel over the next five years.

The extension will see 30 million tonnes of iron ore supplied into the joint venture, with Sinosteel making a one-off payment of $45m to Rio Tinto. The separate agreement will see Rio Tinto selling up to 40 million tonnes of iron ore to Sinosteel between 2016 and 2021.

Rio Tinto Iron Ore chief executive Andrew Harding and Sinosteel president Liu Andong signed the Channar agreement at the Great Hall of the People in Beijing, in a ceremony witnessed by Australian Prime Minister Malcolm Turnbull and Chinese Premier Li Keqiang.

"In the 50 years that we have been exporting 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,” Harding said.

"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."

The joint venture extension remained conditional on approval from the Australian and Chinese governments and the Western Australia state governments.

"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,” commented Sinosteel’s Andong.

"The relationship between Sinosteel and Rio Tinto has demonstrated the ability of our companies and both nations to sustain significant long-term joint commercial activities for the benefit of all concerned."