TIDMRIO
RNS Number : 3582Z
Rio Tinto PLC
14 September 2022
14 September 2022
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Rio Tinto and Baowu agree to form joint venture to develop
Western Range
Rio Tinto (54 per cent) and China Baowu Steel Group Co. Ltd
(Baowu) (46 per cent) have agreed to enter into a joint venture
with respect to the Western Range iron ore project in the Pilbara,
Western Australia, investing $2 billion ($1.3 billion Rio Tinto
share[1]) to develop the mine.
Western Range's annual production capacity of 25 million tonnes
of iron ore will help sustain production of the Pilbara Blend from
Rio Tinto's existing Paraburdoo mining hub. The project includes
construction of a primary crusher and an 18 kilometre conveyor
system linking it to the existing Paraburdoo processing plant.
Construction is expected to begin in early 2023 with first
production anticipated in 2025. The construction phase will support
approximately 1,600 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 are already included in
the Group's capital expenditure guidance of around $9-10 billion
for each of 2023 and 2024. Both parties will pay their portion of
capital costs for the development of the mine, and mine operating
costs, plus a nominal ongoing resource contribution fee calculated
by reference to Western Range production volumes. There is no
upfront consideration being paid by either party.
Rio Tinto and Baowu have also agreed to enter into an iron ore
sales agreement at market prices covering a total of up to 126.5
million tonnes of iron ore over approximately 13 years (together
with the joint venture, the "Transaction"). This volume represents
Baowu's 46 per cent interest in the anticipated 275 million tonnes
of production from Western Range through the Joint Venture.
Rio Tinto has a long history of successfully partnering and
investing with customers to develop new mines in the Pilbara. Rio
Tinto and Baowu's partnership in the Pilbara dates back to the 2002
Bao-HI Joint Venture to develop the Eastern Range deposits in the
Hamersley Ranges (Eastern Range) and Western Range, subject to a
production cap of 200 million tonnes. It is now expected the
production cap will be sourced entirely from Eastern Range, and
this Transaction will continue Rio Tinto's relationship with Baowu
through development of Western Range.
Rio Tinto Iron Ore Chief Executive Simon Trott said "This is a
very significant milestone for both Rio Tinto and Baowu, our
largest customer globally. We have enjoyed a strong working
relationship with Baowu for more than four decades, shipping more
than 200 million tonnes of iron ore under our original joint
venture, and we are looking forward to extending our partnership at
Western Range.
"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 said "The signing of the joint
venture agreement for the Western Range Project is a significant
event in the history of cooperation between Baowu and Rio Tinto. We
fully appreciate the persistent efforts of both teams in
accomplishing the important achievement. The Bao-HI joint venture
has been successfully operating for more than 20 years, leading us
to a win-win result, and reaping friendship and trust.
"We hope that the two parties will deepen the mutually
beneficial and win-win partnership, continue to carry forward the
spirit of sincere cooperation and further expand cooperation in
more fields and aspects on the basis of working together to operate
the project well."
Rio Tinto has worked closely with the Traditional Owners on
whose country Western Range is situated, the Yinhawangka People, to
co-design a Social and Cultural Heritage Management Plan for the
project, designed to protect signiticant cultural and heritage
values in the area.
The plan, which was agreed with Yinhawangka Aboriginal
Corporation and announced earlier this year, outlines protocols for
joint decision-making on environmental matters and mine
planning.
Simon Trott said "We have worked in partnership with the
Yinhawangka People to jointly develop a Social, Cultural and
Heritage Management Plan as part of our commitment to protecting
significant cultural and environmental values at Western
Range."
Entry into the Transaction with Baowu is subject to satisfaction
of various conditions precedent, including approvals from Rio Tinto
shareholders, the Australian Government, Chinese Government
regulatory agencies and the Western Australian Government, among
others.
As a result of Baowu having common ownership with Aluminum
Corporation of China (Chinalco) due to both being Chinese
state-owned entities, and Chinalco indirectly holding 11.3% of
shares in the Rio Tinto Group, Baowu may be considered to be an
associate of a substantial holder or related party of Rio Tinto for
the purpose of the ASX Listing Rules and UK Listing Rules,
respectively.
As the Transaction is considered the sale of a "substantial
asset" to the associate of a substantial shareholder under Chapter
10 of the ASX Listing Rules, it is subject to approval from a
majority of independent Rio Tinto Limited shareholders (that is,
not including Chinalco and any other entities considered to be
associates of Chinalco under the ASX Listing Rules).
Although the Transaction is a related party transaction under
the UK Listing Rules, it is classified as a smaller related party
transaction under UK Listing Rule 11.1.10 and as such, shareholder
approval is not required under the UK Listing Rules. However, as
Rio Tinto operates under a dual-listed structure, approval for the
Transaction under the ASX Listing Rules is required to be sought
from shareholders of both Rio Tinto Limited and Rio Tinto plc
voting as a joint electorate under the agreement that regulates the
dual-listed structure. As such, general meetings of both Rio Tinto
Limited and Rio Tinto plc are planned for 25 October 2022, with
further details to be announced and the relevant notices of meeting
and associated materials to be made available to Rio Tinto
shareholders shortly.
In accordance with UK Listing Rule 11.1.10, Rio Tinto plc has
obtained written confirmation from a sponsor that the terms of the
Transaction are fair and reasonable as far as Rio Tinto plc's
shareholders are concerned.
Notes to editors
Rio Tinto's Paraburdoo hub is comprised of three operating
mines, Paraburdoo, Channar and Eastern Range.
Western Range contains two deposits, 36W-50W and 55W-66W, which
are located within the Hamersley Basin of Western Australia. The
deposits' mineralisation is primarily hosted by the Brockman Iron
Formation with additional detrital mineralisation present.
The 36W-50W and 55W-66W deposits contain a Measured Mineral
Resource of 22 Mt at 59.1% Fe, Indicated Mineral Resource of 102 Mt
at 61.5% Fe, and an Inferred Mineral Resource of 108 Mt at 61.4%
Fe.
The 36W-50W deposit contains a Proven Ore Reserve of 109 Mt at
62.1% Fe and a Probable Ore Reserve of 56 Mt at 61.7% Fe[2].
Mineral Resources are reported in addition to Ore Reserves.
Mineral Resources and Ore Reserves are quoted on a 100 per cent
basis.
Contacts Please direct all enquiries to media.enquiries@riotinto.com
Media Relations, UK Media Relations, Australia
Illtud Harri Jonathan Rose
M +44 7920 503 600 M +61 447 028 913
Matthew Klar Matt Chambers
M + 44 7796 630 637 M +61 433 525 739
David Outhwaite Jesse Riseborough
M +44 7787 597 493 M +61 436 653 412
Media Relations, Americas Investor Relations, Australia
Simon Letendre Amar Jambaa
M +1 514 796 4973 M +61 472 865 948
Malika Cherry
M +1 418 592 7293
Investor Relations, UK
Menno Sanderse
M: +44 7825 195 178
David Ovington
M +44 7920 010 978
Clare Peever
M +44 7788 967 877
Rio Tinto plc Rio Tinto Limited
6 St James's Square Level 43, 120 Collins Street
London SW1Y 4AD Melbourne 3000
United Kingdom Australia
T +61 3 9283 3333
T +44 20 7781 2000 Registered in Australia
Registered in England ABN 96 004 458 404
No. 719885
This announcement is authorised for release to the market by
Steve Allen, Rio Tinto's Group Company Secretary.
riotinto.com
[1] Rio Tinto share includes 100% of funding costs for
Paraburdoo plant upgrades
[2] These Mineral Resource and Ore Reserve estimates have been
reported in accordance with the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC
Code) and the ASX Listing Rules in a release to the ASX dated 14
September 2022 titled "Western Range Mineral Resources and Ore
Reserves" which is available at Resources & reserves
(riotinto.com) ("Table 1 Release"). The Competent Person
responsible for reporting the Mineral Resources was Mr Philip
Savory, who is a Fellow of The Australasian Institute of Mining and
Metallurgy. The Competent Person responsible for reporting the Ore
Reserves was Mr Ryan Bleakley, who is a Member of The Australasian
Institute of Mining and Metallurgy. Rio Tinto is not aware of any
new information or data that materially affects these Mineral
Resource or Ore Reserve estimates and confirms that all material
assumptions and technical parameters underpinning the estimates
continue to apply and have not materially changed. The form and
context in which the Competent Persons' findings are presented have
not been materially modified from the Table 1 Release.
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