The world’s largest steelmaker, China’s Baowu Group, and Rio Tinto, the world’s leading iron ore miner, have come together to form a joint venture agreement to develop the Baoruiji West slope project in the Pilbara region in Australia. Both parties have agreed to share 46% and 54% equity in the project.
The project has a capacity of around 25 million tonnes (mnt) per year with an average grade of around Fe 62%. Xipo joint venture is expected to produce around 275 mnt of iron ore under the period.
The total investment estimated for the project is around US$2 billion, and it will start construction in early 2023 and put into operation by 2025.
Before this project, the companies had already developed and nurtured other projects. The Boruiji joint venture project is an iron ore project jointly developed by the former Baosteel group and Hamersley holdings, a subsidiary of Rio Tinto, in the Pilbara region of Western Australia.
The Xipo project is the extension of the existing Boruiji joint venture project (the Dongpo project).
The parties have also concluded an iron ore purchase agreement during the venture period. Baowu will buy around 11.5 mnt iron ore on a yearly basis and a total of 126 mnt of iron ore during the venture in proportion to its equity.
Rio Tinto has already started transporting more than 200 mnt of iron ore in the Bao Rui Ji Dongpo project. Baowu is one of the largest customers for Rio Tinto globally.
However, the project’s approval by the Chinese and Australian governments is still pending in the next phase.
Leave a Reply