Rio Tinto in JV with Chinalco

3rd Dec 2010 07:05

Mining giant Rio Tinto is to be the junior partner in a joint venture with the Aluminium Corporation of China, better known as Chinalco.Chinalco, which is a major customer and shareholder of Rio Tinto, will own 51% of the joint venture (JV) which has been formed to explore mainland China for world-class mineral deposits. Rio Tinto will own the remaining 49%.The JV is expected to commence operations in the first half of 2011, with three, four or five large exploration projects selected for initial focus, with the potential for additional regions to be added at a later date."This exploration JV is the latest chapter in the rich history of partnerships between Rio Tinto and China. The combination of skills provided by Rio Tinto and Chinalco offers great potential to unlock value for mutual benefit," noted Rio Tinto's chief executive Tom Albanese.In 2009, Rio Tinto looked to Chinalco for $19.5bn cash to reduce its debt mountain in a move that would have seen the Chinese company double its shareholding in Rio Tinto to 18% and take two seats on the board.Rio Tinto pulled out of the deal after shareholder and government opposition, causing a cooling in relations between the two companies but Friday's deal suggests the two parties have kissed and made up.Rio Tinto will appoint the chief executive of the exploration JV, with the chairman of the five-member board nominated by Chinalco.In a separate announcement Rio Tinto announced an extension of its Channar Mining JV with Sinosteel in the Pilbara region of Western Australia.The original Channar agreements for the production of 200 million tonnes were signed in 1987, with strong Australian and Chinese Government support. The new deal paves the way for a further 50 million tonnes of iron ore to be produced by the JV."Channar iron ore enjoys a high reputation in the Chinese market. The long-term friendly cooperation between Sinosteel and Rio Tinto has become a model for Sino-Australian economic interaction and the signing of the Channar Mining Joint Venture Extension Agreement has significant meaning for the further development of Sino-Australian economic relations," claimed Huang Tianwen, president of Chinese steel giant Sinosteel.