Rio Tinto and Chinese company Sinosteel have agreed to extend their Channar Mining Joint Venture (JV) for the third time.
The latest extension will see the delivery of an additional ten million tonnes of iron ore to the JV from Western Australia.
Rio Tinto Iron Ore chief executive Chris Salisbury said: “The Channar joint venture is one of Australia’s most significant trading partnerships and has helped pave the way for the incredibly strong relationship we have forged with China today.
“This extension represents another milestone in our 30-year partnership that has seen more than 250 million tonnes of iron ore delivered from the Pilbara to China.”
As part of the agreed extension, Sinosteel will make an upfront payment of $15m to Rio Tinto, in addition to production royalties that are linked to the iron ore price.
It is conditional upon approvals from the governments of Australia, China, and Western Australia.
Signed in 1987, the original Channar JV provided for the production of 200 million tonnes of iron ore. It was extended in 2010 to produce a further 50 million tonnes of iron ore.
In April last year, the companies extended their JV for the second time.
With this third extension, the life of the JV will be increased to cover production totalling 290 million tonnes.
Rio Tinto owns a 60% stake in the Channar JV, while the remaining 40% is held by Sinosteel. The JV owns the Rio Tinto-managed Channar mine in the Pilbara region of Western Australia.
The agreement provides Sinosteel with off-take rights for a volume of Pilbara Blend equivalent to Channar production.