Chinalco teams with Rio Tinto in ore mine
By Pan Xiaoyi |
March 20, 2010, Saturday
|
Print Edition
Print Edition
CHINA'S Chinalco and Rio Tinto Ltd have signed a deal to develop an iron ore reserve in the West African country of Guinea.
The nonbinding joint venture agreement covers rail and port infrastructure as well as the Simandou mine itself, Chinalco and the Anglo-Australian miner said in separate statements yesterday.
The deal is the first time the companies have teamed up since Rio Tinto scrapped Chinalco's US$19.5 billion investment in equity and assets nine months ago and four Rio employees were arrested in Shanghai last August.
The trial of the four employees charged with bribery and stealing commercial secrets will begin on Monday in a Shanghai court.
Under the deal, Chinalco will acquire a 47 percent interest in the joint venture by providing US$1.35 billion to fund ongoing development during the next two to three years. At the end of that period, Rio Tinto will own 50.35 percent and Chinalco 44.65 percent.
"We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit," Rio Tinto CEO Tom Albanese said in a statement.
"It makes sense that Rio Tinto values the cooperation with Chinese partners, as China is the world's largest iron ore importer," said Fan Guohe, an analyst at Philip Securities Research.
"Rio has an eye on Chinalco's capital strength and the partnerships will be in the interests of both sides," added Fan.
The Simandou project is believed to be a large-scale, long-life asset and the single best undeveloped source of high-grade iron ore.
The project has an estimated 2.25 billion metric tons of resources, with ultimate reserves of 5 billion metric tons. It can produce 70 million metric tons annually at the initial phase. The iron ore will be shipped to China through a sales company set by the two companies, Chinalco said.
China imported 628 million metric tons of iron ore in 2009, accounting for nearly 70 percent of the country's total consumption.
The state-owned Chinalco planned to invest in Rio in February last year to help the debt-laden company ride out the economic slump, but Rio abandoned the deal after an improvement in both mining and capital markets.
Analysts said it is good for Chinese companies to seek assets and resources abroad, given the nation's increasing demand for resources and large foreign reserves.
"With the global economy back on track to recovery, to set up joint ventures will be more feasible and acceptable by foreign firms," said Fan.
Chinalco said it marks another step forward for the company to go international and fits in its development target for a diversified metals mining company."
The nonbinding joint venture agreement covers rail and port infrastructure as well as the Simandou mine itself, Chinalco and the Anglo-Australian miner said in separate statements yesterday.
The deal is the first time the companies have teamed up since Rio Tinto scrapped Chinalco's US$19.5 billion investment in equity and assets nine months ago and four Rio employees were arrested in Shanghai last August.
The trial of the four employees charged with bribery and stealing commercial secrets will begin on Monday in a Shanghai court.
Under the deal, Chinalco will acquire a 47 percent interest in the joint venture by providing US$1.35 billion to fund ongoing development during the next two to three years. At the end of that period, Rio Tinto will own 50.35 percent and Chinalco 44.65 percent.
"We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit," Rio Tinto CEO Tom Albanese said in a statement.
"It makes sense that Rio Tinto values the cooperation with Chinese partners, as China is the world's largest iron ore importer," said Fan Guohe, an analyst at Philip Securities Research.
"Rio has an eye on Chinalco's capital strength and the partnerships will be in the interests of both sides," added Fan.
The Simandou project is believed to be a large-scale, long-life asset and the single best undeveloped source of high-grade iron ore.
The project has an estimated 2.25 billion metric tons of resources, with ultimate reserves of 5 billion metric tons. It can produce 70 million metric tons annually at the initial phase. The iron ore will be shipped to China through a sales company set by the two companies, Chinalco said.
China imported 628 million metric tons of iron ore in 2009, accounting for nearly 70 percent of the country's total consumption.
The state-owned Chinalco planned to invest in Rio in February last year to help the debt-laden company ride out the economic slump, but Rio abandoned the deal after an improvement in both mining and capital markets.
Analysts said it is good for Chinese companies to seek assets and resources abroad, given the nation's increasing demand for resources and large foreign reserves.
"With the global economy back on track to recovery, to set up joint ventures will be more feasible and acceptable by foreign firms," said Fan.
Chinalco said it marks another step forward for the company to go international and fits in its development target for a diversified metals mining company."
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