Rio Tinto to buy Iron Ore Holdings' Iron Valley deposit
24 November 2009
Rio Tinto, the world's second-largest iron ore miner, today announced plans to acquire and transport up to 1.5 million tonnes annually of Iron Ore Holdings (IOH) Phil's Creek iron ore deposit.
Rio Tinto Iron Ore chief executive Sam Walsh has welcomed the agreement reached with junior miner Iron Ore Holdings (IOH), enabling the sale of ore from IOH's Phil's Creek deposit to be sold to Rio Tinto under an innovative mine-gate sale process.
Under the agreement, commercial terms for which have now been agreed, up to 1.5 million tonnes will be delivered annually to Rio Tinto, who will then transport it to the coast for shipment as part of its product suite.
Rio Tinto has also agreed to enter into an exclusive agreement with IOH to examine its Iron Valley deposit, situated approximately 10km north east from Rio Tinto's Yandicoogina operation that may lead to the purchase of part or the entire lease covering the deposit.
The purchase would reflect a similar move made by BHP Billiton last month to acquire a junior iron ore miner United Minerals Corporation for A$204 million ($188 million), thwarting a Chinese A$27.2 million bid for an 11.4-per cent stake in the company. (See: BHP Billiton to acquire iron ore miner UMC for A$204 million)
"This is a significant development for Rio Tinto, IOH and the Pilbara generally. It is a prime example of how a major established producer and a small, progressive junior can work together to achieve an excellent outcome for all stakeholders," Walsh said.
"Without this deal, the benefits flowing from the development of the isolated Phil's Creek deposit would be denied to the respective shareholders and to the community of Western Australia."
"Rio Tinto welcomes the opportunity to also examine the larger Iron Valley deposit and establish whether it can be best developed within our integrated system of 11 mines, 1,300-kilometre rail network and three ports in two locations."