Rio and BHP sign binding JV agreement
December 6, 2009
BHP Billiton Limited (BHP) and Rio Tinto Limited (RIO) have signed a binding agreement to create a production JV with their Pilbara iron ore operations in Western Australia. The signing of the agreement comes exactly six months after the joint venture was first announced to the market and amid speculation Rio Tinto was getting cold feet on the deal.
The companies acknowledged the deal still requires regulatory approval both in the US and Europe, with the deal hoped to be completed by the second half of 2010.
The two mining giants have previously said the potential savings could top $10 billion after adjacent mines are combined into one operation and combing administration overheads and rail and port facilities into one operation.
Unlike the June 5 announcement the current arrangement would not include joint marketing activities.
Meanwhile, Rio Tinto said it would use the majority of its investment in carbon capture and storage on a Californian hydrogen energy project it is working on.
Group executive, Technology & Innovation, Preston Chiaro, said that the California project is an excellent strategic fit for Rio Tinto as it would use coal or petcoke as a feedstock.
Rio Tinto said that it had sold its 50 per cent interest in Hydrogen Energy International, which owns an interest in the Hydrogen Power Abu Dhabi project, to BP for an undisclosed sum.
“We look forward to continuing to work with our partner BP, the US Department of Energy and other key stakeholders to deliver the California project, which we regard as a critical project in the development of CCS technology,” Mr Chiaro said.
At the close Friday, BHP shares were trading at $41.40 and Rio Tinto shares were $71.85.
The companies acknowledged the deal still requires regulatory approval both in the US and Europe, with the deal hoped to be completed by the second half of 2010.
The two mining giants have previously said the potential savings could top $10 billion after adjacent mines are combined into one operation and combing administration overheads and rail and port facilities into one operation.
Unlike the June 5 announcement the current arrangement would not include joint marketing activities.
Meanwhile, Rio Tinto said it would use the majority of its investment in carbon capture and storage on a Californian hydrogen energy project it is working on.
Group executive, Technology & Innovation, Preston Chiaro, said that the California project is an excellent strategic fit for Rio Tinto as it would use coal or petcoke as a feedstock.
Rio Tinto said that it had sold its 50 per cent interest in Hydrogen Energy International, which owns an interest in the Hydrogen Power Abu Dhabi project, to BP for an undisclosed sum.
“We look forward to continuing to work with our partner BP, the US Department of Energy and other key stakeholders to deliver the California project, which we regard as a critical project in the development of CCS technology,” Mr Chiaro said.
At the close Friday, BHP shares were trading at $41.40 and Rio Tinto shares were $71.85.
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