Rio Tinto will extend an historic partnership with its Chinese joint venture partner Baowu after the two parties agreed to press the button on their $US2 billion ($3b) Western Range iron ore project in the Pilbara.
The 25 million tonne-a-year project will help sustain production of the company’s flagship Pilbara Blend product from its existing Paraburdoo mining hub, as the Eastern Range project depletes.
The project includes construction of a primary crusher and an 18km conveyor system linking it to the existing Paraburdoo processing plant.
Construction is expected to begin early next year with first production anticipated in 2025.
The construction phase will support about 1600 jobs, with the mine requiring about 800 ongoing operational roles which are expected to be filled by existing workers transitioning from other sites in the Paraburdoo mining hub.
Rio Tinto’s share of the capital costs ($US1.3b) are already included in the group’s capital expenditure guidance of about $US9b-$US10b for each of 2023 and 2024.
Rio and Baowu have also agreed to enter into an iron ore sales agreement at market prices covering a total of up to 126.5mt of iron ore over about 13 years.
That volume represents Baowu’s 46 per cent interest in the anticipated 275mt of production from Western Range.
Rio’s partnership with Baowu in the Pilbara dates back to the 2002 Bao-HI Joint Venture to develop the Eastern Range deposits in the Hamersley Ranges and Western Range, subject to a production cap of 200mt.
Rio Tinto’s iron ore chief executive Simon Trott said Baowu was the company’s biggest customer globally.
“We have enjoyed a strong working relationship with Baowu for more than four decades, shipping more than 200mt of iron ore under our original joint venture, and we are looking forward to extending our partnership at Western Range,” he said.
“The development of Western Range represents the commencement of the next significant phase of investment in our iron ore business, helping underpin future production of the Pilbara Blend, the market benchmark.
“At the same time, Rio Tinto and Baowu continue to work together on low-carbon steelmaking research, exploring new methods to reduce carbon emissions and improve environmental performance across the steel value chain.”
Baowu Resources chairman Shi Bing described the new joint venture agreement for Western Range as a significant event in the history of co-operation between the two companies.
Rio Tinto has developed a Social and Cultural Heritage Management Plan for Western Range in consultation with the Traditional Owners, the Yinhawangka People.
The plan, designed to protect significant cultural and heritage values in the area, outlines protocols for joint decision-making on environmental matters and mine planning.
The project is still subject to approval by Rio shareholders, the Federal Government, Chinese Government regulatory agencies and the State Government.
Western Range comprises two deposits of primarily Brockman-style ore, collectively hosting a mineral resource of 232mt at 61.2 per cent iron grade.