Rio Tinto chief Tom Albanese says a proposed iron ore joint venture in Western Australia with BHP Billiton will be vital for the company’s future.

“The joint venture will bring together the Western Australian iron ore assets of both companies, while keeping marketing arrangements totally separate within each company,” Albanese said.

“We will be better positioned for future demand growth and will capture substantial synergies.”

Rio recently withdrew from talks to jointly market 15% of the iron ore produced as part of the JV because it could become an obstacle for receiving European Commission’s approval for the proposed collaboration.

Albanese said, however, that while there was still a strong long-term demand for iron ore Rio still expected things to be hard once the economic downturn had come out of the slump.

“Global economic power is shifting from west to east …. (and) has been accelerated by the global financial crisis,” Albanese said.

“Over the next five years, China is expected to consume more iron ore than Australia has exported throughout its history.”

“China will be crucial to the future wealth of this country.”