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A worker holding a lump of high-grade iron ore from a Rio Tinto mine in West Australia\'s Eastern Pilbara region.

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BHP, Rios sign deal on iron ore JV

I-Net Bridge | Mon, 07 Dec 2009 09:30
[miningmx.com] -- BHP BILLITON and Rio Tinto have signed binding agreements on the proposed production joint venture covering both companies' Western Australian iron ore assets, it was reported at the weekend.

The companies anticipate completion of the joint venture in the second half of calendar year 2010. The agreements cover all aspects of how the joint venture will operate and be governed.

The companies have also filed submissions with the European Commission and the Australian Competition and Consumer Commission in relation to the proposed production joint venture and expect to submit filings in other relevant jurisdictions shortly.

The production joint venture encompasses all current and future Western Australian iron ore assets and liabilities and will be owned 50:50 by BHP Billiton and Rio Tinto.

"It will deliver substantial synergies resulting from combining the companies' Western Australian iron ore operations, with the aim of producing more iron ore at lower cost. BHP Billiton and Rio Tinto believe the net present value of these unique production and development synergies will be in excess of $10bn (100% basis)," said the companies.

BHP Billiton CEO,Marius Kloppers , said: "We are very pleased to now have formal and binding agreements in place to develop this important joint venture.

"With the history of both companies' attempts to join together these two world-class iron ore operations in Western Australia at various times, this deal has effectively been more than a decade in the making. It is an important milestone towards delivering substantial additional benefits to both sets of shareholders, and to the shareholders of our respective joint venture partners in the Pilbara."

Tom Albanese, CEO, Rio Tinto, said: "Signing binding agreements brings us one step closer to unlocking the full production potential of our Pilbara iron ore assets and achieving substantial benefits for all our stakeholders. Completing the joint venture is a priority for Rio Tinto in 2010 and I look forward to realising this vision and capturing the synergies for our shareholders."

On 15 October 2009, BHP Billiton and Rio Tinto announced that the partners would not proceed with any joint venture marketing activity. This is the only material change to the non-binding core principles agreement signed on 5 June 2009. The production joint venture will deliver all its iron ore output to BHP Billiton and Rio Tinto to sell independently through their own marketing groups.