Global miner Rio Tinto signed a $2.9 billion pact with Chinese metals group Chinalco to jointly develop an African iron ore project, amid tense iron ore price talks with China's steel mills and just ahead of a trial of four Rio employees.
The venture in Simandou, Guinea, not binding at this stage, marks a turnaround for the companies after Rio last year scrapped a $19.5 billion tie-up with the state-owned Chinese firm - a falling-out that also bruised Sino-Australian ties. The new alliance, rumoured for some time, comes just days before four Rio Tinto employees stand trial in China on charges of commercial spying during price talks with Chinese mills last year. Rio Tinto has said its workers are innocent of the charges.
Under the latest deal between the Anglo-Australian miner Rio and Chinalco, a portion of the iron ore from Simandou would be earmarked for China, though it may take years to complete development. "We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit," Rio Tinto Chief Executive Tom Albanese said in a statement.
Chinalco has been Rio Tinto's largest shareholder since 2008, holding 9 percent of the stock. Under the deal, Rio Tinto would put its current 95 percent holding in Simandou into the new joint venture. Chinalco would invest $1.35 billion for a 47 percent stake, an effective 44.65 percent interest in the project itself.
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