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Rio Tinto, Chinalco sets up joint venture for African iron ore project

Rio Tinto, the giant mining company, today struck a deal with Aluminum Corporation of China (Chinalco) to develop the Simandou iron ore reserve in Guinea in West Africa.

The joint venture agreement covers rail and port infrastructure as well as the mine itself, Rio Tinto said in a statement.

Rio Tinto owns 95 percent of the Simandou project, with another 5 percent owned by the World Bank.

According to the agreement, Chinalco will acquire a 47-percent stake in the project by providing 1.35 billion Australian dollars (US$1.25 billion) in an earn-in basis through sole funding of ongoing development during the next two to three years.

"We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit," Rio Tinto's Chairman Tom Albanese said in a statement.

Albanese described Chinalco as an "excellent partner" at Simandou.

Simandou is a huge iron ore project in south eastern Guinea.

"We believe the Simandou project is a large scale, long life asset and is the single best undeveloped source of high grade iron ore," Albanese said.

"Rio Tinto and Chinalco will now work on finalizing definitive and binding transaction documentation," the statement said.


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