Rio Tinto signs agreement with Japanese partners

Rio Tinto signs agreement with Japanese partners

According to recent news in the market, the world's second largest mining company Rio Tinto and its Japanese partners in the Robe River Joint Venture project have signed an agreement to establish closer cooperation between Hamersley Iron and Robe, and the iron ore and technical exchange initiatives announced on April 7, 2004. The agreements cover the formation and operation of Pilbara Iron which includes common usage of port, rail and power infrastructure and the provision of corporate and site services to Hamersley Iron & Robe in the Pilbara region of Western Australia. The agreement includes the sale of 47% of the Beasley River iron ore deposit to the Japanese participants in the Robe River Joint Venture; as well as the 8% stake in the Hail Creek iron ore deposits which Nippon Steel purchased back in July of this year. In July the joint venture participants had spent A$120 million ($90 million) to expand the capacity of the Hail Creek iron ore mine operation to 8 million tons per year. This expansion project is largely supported by a long term sales agreement that was signed by Nippon Steel to buy 30 million tons of coking coal over a period of 15 years. Work on the expansion project began back in August of this year and is expected to be completed by 2006. The agreement also covers a long term sales contract for the supply of 150 tons of Yandi iron ore to Nippon Steel over a period of about 20 years. And finally, the agreement calls for the progression of a number of technical exchange initiatives including logistics initiatives for the delivery of iron ore and coal, and the optimization of raw material use in the context of steel industry requirements. In the deal, Rio Tinto will receive $150 million for the sale of the 8% and 2% stakes in the Hail Creek Joint Venture and 47% of the Beasley River iron ore deposit. The Pilbara and Beasley River agreements are subject to the approval currently being sought from the Western Australian government.