Rio Tinto and Sinosteel Corporation have agreed to extend their Channar Mining Joint Venture in Australia's Pilbara region.
The Channar joint venture is 60% owned by Rio Tinto and 40% by Sinosteel and was formed in 1987 for the development Channar mine in northwestern part of Australia. It provided for the production of 200 million tonnes of iron ore, which was later extended by 50 million tonnes.
The extension of the JV along with a separate agreement for Rio Tinto to supply iron ore from the Pilbara, will enable sales of up to 70 million tonnes of iron ore to Sinosteel Corporation over the course of five years.
This extension will see 30 million tonnes of iron ore supplied into the joint venture. Sinosteel will make a one-off payment of $45m to Rio Tinto as well as provide extra production royalties associated to the iron ore price.
In a separate agreement, Rio Tinto will sell up to 40 million tonnes of iron ore to Sinosteel between 2016 and 2021.
Rio Tinto iron ore chief executive Andrew Harding and Sinosteel Corporation president Liu Andong signed the Channar agreement, extending the relationship until the end of the decade.
Rio Tinto Iron Ore chief executive Andrew Harding said: "In the 50 years that we have been exporting iron ore from the Pilbara, the Channar joint venture stands out as one of the most important deals not only for our business, but for Australia's economic ties with China. Now in its 30th year, it is one of the longest running and most successful partnerships between the two nations.
"We place immense value on our long-term customer relationships and today's agreements clearly demonstrate that Rio Tinto and Sinosteel remain committed to our mutually beneficial partnership."
Sinosteel Corporation president Liu Andong said: "The Channar Mining Joint Venture was the first large-scale mining initiative between our two countries and is a cornerstone of Chinese and Australian trade. The extension of the joint venture marks another milestone in trade cooperation, especially in the current economic climate.
"The relationship between Sinosteel and Rio Tinto has demonstrated the ability of our companies and both nations to sustain significant long-term joint commercial activities for the benefit of all concerned."
The extension of the joint venture is subject to certain conditions, including approvals from the West Australian, Australian and Chinese governments.