Mining giant Rio Tinto and China’s Chinalco Friday signed a 1.35 billion US dollar deal to develop a huge African iron ore field, renewing close ties after a major deal collapsed last year.
Rio said state-owned Chinalco will acquire an initial 47 percent stake in its Simandou project in Guinea, which has been delayed by political upheaval in the volatile country.
The non-binding agreement comes after Rio snubbed a massive Chinalco cash injection last June, and just days before four of its employees are tried over alleged bribery and industrial espionage during iron ore contract negotiations.
“We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit,” Rio chief executive Tom Albanese said in a statement.
Analysts say the “world class” Simandou mine contains an estimated 2.5 billion tonnes of high quality iron ore and could produce 200 million tonnes a year, matching Rio’s entire Western Australian Pilbara operation.
Rio said the project, which involves building a mine, railway and port, would create tens of thousands of jobs in the impoverished country during construction and some 4,000 full-time posts when operations start.
“Chinalco brings its own skills and capabilities in major projects and access to the infrastructure expertise of other Chinese organisations,” Albanese said.
“We believe the Simandou project is a large scale, long life asset and is the single best undeveloped source of high grade iron ore.”
James Wilson, a research analyst with stockbroker DJ Carmichael, said the Simandou field stretches for some 110 kilometres and is 66 percent iron, higher than any of the Australian ore Rio sells to China in vast quantities.
“It’s a world-class monster. It’s a gorilla of a project,” Wilson told AFP earlier this week.
“It’s pretty good gear, and it will underpin Rio Tinto’s expansion down the track,” he added.
Anglo-Australian Rio, the world’s third-biggest miner, has been working on Simandou for about 12 years but has hit trouble with Guinea’s military rulers, who handed part of its landholding to an Israeli billionaire.
China signed a seven-billion-US-dollar mining and oil deal with Guinea last October in a controversial move, just weeks after troops opened fire on protesters, killing 150 people, according to rights groups.
Rio’s senior officials have outlined plans to strengthen relations with China, and Albanese is due to attend the China Development Forum in Beijing this weekend.
On Monday, Australian citizen Stern Hu and three Chinese colleagues will begin a three-day trial in Shanghai which has provoked diplomatic ructions between Canberra and Beijing.