SHANGHAI, Aug. 2 (SMM) -- Aluminum Corporation of China Limited (CHALCO) signed on July 29th a binding joint-venture agreement with Rio Tinto Group to develop and operate the Simandou iron ore project in Guinea. The agreement follows the initial accord for the project signed on March 19th by Chinalco, CHALCO's state-owned parent company. The agreement covers all aspects of the joint venture and the project, including mine planning, construction, and management, as well as related railway and port facilities. The agreement still requires approval by Guinean government and must meet Chinese regulatory requirements.
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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