Australia: Mitsui to join Rio Tinto’s Rhodes Ridge iron ore project in $5.3 billion deal

• Mitsui to have 40% interest in joint venture
• Area projected to have 6.8 bnt of resources

Mysteel Global: Japanese trader Mitsui and Co has announced that it intends to acquire a 40% interest in the Rhodes Ridge Joint Venture iron ore project in the Pilbara region of Western Australia for about $5.3 billion, according to the company’s latest news release on Wednesday.

Rhodes Ridge is one of the world’s largest untapped iron ore deposits, with 6.8 billion tonnes (bnt) of mineral resources at an average grade of 61.6% Fe, the trader said. A pre-feasibility study for the project is expected to be completed this year, with the first ore set to be produced by 2030, said Rio Tinto, the world’s largest iron-ore producer and 50% shareholder of the joint venture that will develop and operate the project.

The potential capacity of Rhodes Ridge in the long term is projected at more than 100 million tonnes (mnt)/year of high-quality iron ore, according to Rio Tinto. Consequently, the acquisition of a 40% stake in the project is expected to bring Mitsui over 40 mnt/y of iron ore yield ultimately, though, at the initial stage, its equity share of production of the project is estimated at about 16 mnt/y, Mitsui said in the release.

Iron ore produced at Rhodes Ridge will be blended into the ore sold by Rio Tinto and exported to Asian countries, including Japan, Mitsui added.

Mitsui and Rio Tinto are long-standing partners at the Robe River Joint Venture, another iron ore project in the Pilbara region that began operations in 1972. As the existing Robe River iron ore project is geographically close to the Rhodes Ridge project, synergies are expected by utilising existing infrastructure such as railways and ports and by blending ores.

Robe River produces approximately 65 mnt/y of iron ore, which is railed to the port of Cape Lambert where lump and fines products are shipped to steel producers, primarily throughout Asia.

Mitsui, traditionally Nippon Steel’s trader of choice, holds stakes in unincorporated joint ventures with global resource firms, including 33% in Robe River with Rio Tinto; 7% in a set of Western Australian operations at Mount Newman, Yandi, Goldsworthy, and Jimblebar (with BHP); and a 6.66% stake in Vale, Brazil.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.