Rio Tinto and Chinalco have signed a memorandum of understanding to form a joint venture that will develop and operate the Simandou iron ore project in Guinea.
The proposed joint venture company will develop and operate rail and port infrastructure and the Simandou mine.
Chinalco will acquire a 47% interest in the joint venture by providing $1.35bn to Rio Tinto.
Rio Tinto's Simfer subsidiary will continue to manage the development of the Simandou project after the agreement is signed.
The project will also require significant additional development expenditure before it becomes fully operational.
Simandou, a world-class iron ore mining project located in south eastern Guinea, is expected to produce over 70 million tons of iron ore per annum.