Rio Tinto is seeking shareholder approval to approve a joint venture with the China Baowu Steel Group to develop the Western Range mine in the Pilbara of Western Australia, and the associated iron ore offtake agreement.
Addressing shareholders in London and Perth, Rio chairman Dominic Barton said the meetings had been called because Baowu was considered to be in a position of influence in relation to Rio Tinto “for the purposes of the Listing Rules of the Australian Securities Exchange”.
“Rio Tinto operates under a dual-listed companies structure, which is governed by an agreement known as the DLC merger sharing agreement. It regulates the relationship between (Australia-based) Rio Tinto Limited and (UK-based) Rio Tinto ple under that structure, and provides that all shareholders must vote as a joint electorate on certain matters which affect shareholders of both companies in similar ways,” he said.
“Approval of this transaction is a joint decision matter and as such, shareholders of both Rio Tinto Limited and Rio Tinto plc will be asked to vote on the resolutions to be put to shareholders, and their votes will be aggregated as a joint electorate.”
Barton said the Western Range JV and associated offtake agreement present the opportunity for Rio Tinto to extend its valuable relationship with Baowu, which has continued for more than four decades.
“The existing Bao-Hi JV – which we entered into with Baowu in 2002 – has been a key component of that relationship, and has enabled the development and success of the Eastern Range mine in the Pilbara.
“Baowu is an important strategic partner for Rio Tinto, including in relation to collaboration on research and development projects to reduce carbon emissions and improve environmental performance across the steel value chain.”
The Western Range project is for the production of 275 million tonnes of iron ore over approximately 13 years, which will be supported by a long-term iron ore sales agreement with Baowu at market prices for up to a total of 126.5 million tonnes, representing Baowu’s equity interest in the joint venture production.
Rio Tinto’s share in the joint venture will be 54 per cent, and the remainder Baowu’s.
“This development underpins Rio Tinto’s commitment to investing in new mines in Australia, supporting employment and economic development in the region,” Barton said.
“The construction phase will support approximately 1600 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.”