AMSJ » Mining giant secures funding for new $2B project

Mining giant secures funding for new $2B project

Rio Tinto mine workers
Rio Tinto mine workers

A foreign entity will help cover the cost of a proposed $2 billion resources development.

State-run China Baowu Steel Group (CBSG) recently formed a joint venture (JV) with Rio Tinto to support its Western Range Project, about 443km southeast of Karratha.

The deal involves CBSG contributing 46 per cent of development, operating and other costs. The mining giant will fund 54 per cent of fees from its existing capital expenditure guidance of about $9B to $10B, for the years 2023 and 2024 respectively.

The project will initially require a new primary crusher and an 18km-long conveyor system linked to the existing Paraburdoo Processing Plant.

Construction is expected to begin in early 2023 and first production will start sometime in 2025. The operation could produce up to 25 million tonnes (Mt) of iron ore annually once fully operational. About 1600 construction jobs plus a further 800 ongoing operational roles will be created in the process. No positions are advertised yet.

The JV partners separately reached an iron ore sales agreement at market prices for up to 126.5 Mt of iron ore for about 13 years.

“Baowu [is] our largest customer globally. We have enjoyed a strong working relationship with Baowu for more than four decades, shipping more than 200 Mt of iron ore under our original joint venture – and we are looking forward to extending our partnership at Western Range,” Rio iron ore CEO Simon Trott said in a public statement.

Both companies will also collaborate on researching new low-carbon steelmaking methods to reduce carbon emissions and improve “environmental performance across the steel value chain”.

“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,” Baowu chairman Shi Bing added.

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