The rising demand for iron ore raises the need to invest in mining. Rio Tinto, an Australian miner, the largest exporter of iron ore, has initiated a joint venture with its significant importer China Baowu Steel Group, a publicly owned mill. They planned to invest in an iron ore mining project in Western Range Australia in Western Australia’s Pilbara region. They require an investment of $ 2 billion in Western Range Australia. Rio Tinto will invest $1.3 billion with a share of 54%, and China’s Baowu Steel will provide an investment of $700 million with a share of 46 percent.
The relationships between both countries are not good. Starting the project requires the approval of both governments and shareholders to avoid delay or interruption.
Construction of the project will start in 2023, and productivity gains will be in 2025. The production capacity is 25 million tons annually with 62% Fe content. Rio Tinto said it would help to boost the productivity in the Pilbara Iron Ore basin at the Paraburda mining hub. This Joint venture has another agreement that China’s Baowu Steel will buy 126.5 million tons of iron ore annually from Rio Tinto for 13 years.
Rio Tinto and Baowu steel both parties have a good relationship after the success of the Bao H1 joint venture over the 20 years. Both have a collaboration in research & development on green steel manufacturing to reduce carbon emissions for better environmental conditions. Western Range project is a milestone in strengthening the relationship.
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