REG - Rio Tinto - Rio Tinto and Baowu JV to develop Western Range

Rio TintoAnnouncement

14/09/2022 07:00

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RNS Number : 3582Z  Rio Tinto PLC  14 September 2022

 14 September 2022

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

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 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

United Kingdom             Melbourne 3000

 T +44 20 7781 2000          Australia

Registered in England

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                             Registered in Australia

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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)
(https://www.riotinto.com/invest/financial-news-performance/resources-and-reserves)
("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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