Rio Tinto has agreed to form a joint venture with China's Baowu Steel Group to develop the Western Ranges iron ore project in Western Australia's Pilbara region for an investment of $2 billion. The mining giant will own 54% of the joint venture, while Baowu will hold the remaining 46%. Rio Tinto's investment share will reach $1.3 billion.

The miner and Baowu already formed an iron ore joint venture called Bao-HIRanges in 2002. Bao-HI Ranges has been engaged in production at the Eastern Ranges Mine in Western Australia.

Shi Bing, chairman of Baowu Resources, said that the signing of the joint venture agreement for the Western Mountains Project is a major event in the history of cooperation between Baowu and Rio Tinto. We are very grateful to both teams for their tireless efforts to accomplish this important achievement. The Baohai joint venture has been operating successfully for more than 20 years, achieving a win-win situation and gaining friendship and trust.

Rio Tinto said the Western Range project, with an annual capacity of 25 million tonnes of iron ore, is expected to help maintain Pilbara Blend production at the existing Paraburdoo mining centre. The Paraburdoo Mining Centre includes three operating mines, the Paraburdoo, Channar and Eastern Range projects.

Western Range included the construction of a primary crusher as well as an 18km conveyor system to connect it to the existing Paraburdoo processing plant. Rio Tinto also agreed to enter into an iron ore sales agreement with Baowu for the Western Mountains Iron Ore Project. This would be at market prices and would cover as much as 126.5 million tonnes of iron ore over almost 13 years. The volume under the sales agreement represents 46% of Baowu's interest in the new iron ore project, which is expected to produce 275 million tonnes through the joint venture.

Rio Tinto Iron Ore CEO Simon Trotter said: "For over four decades, we have built a strong partnership with Baowu, having transported over 200 million tonnes of iron ore under our original joint venture. Looking forward to the cooperation in the Western Mountains. Keywords: engineering news, overseas news

The development of the Western Range marks the start of the next major investment phase in our iron ore business, helping to underpin future production of Pilbara Blend, the market benchmark. The Western Range JV is subject to approvals by Rio Tinto shareholders, the Australian Government, the Western Australian Government, Chinese government regulators, and certain other regulatory approvals and preconditions.Editor/XingWentao