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According to the agreement, Rio Tinto's 95% stake in Simandou iron ore project will be held by the newly joint venture company. CHALCO will inject a total of USD 1.35 billion in the joint venture over the next 2-3 years, and in the end own 47% of the joint-venture. Once USD 1.35 billion cash injection is complete, CHALCO and Rio Tinto stakes in the Simandou iron ore project will be 44.65% and 50.35%, respectively. The remaining 5% will be held by the International Finance Corporation, a branch of the World Bank.
SMM believes the new CHALCO agreement is in line with its development strategy of overseas expansion and accelerating investment in non-aluminum sectors, including investment in overseas mineral resources. Although CHALCO previously announced the abandonment of its bauxite project in Queensland, Australia, SMM sources report similar large-scale projects are still under negotiation and are expected to be completed in the near future.
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