On Thursday, Rio Tinto signed an exploration agreement with state-owned China Minmetals on a 50/50 joint venture to search for minerals in the country.
Mining giant Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) could soon be searching for minerals in China, in a huge development in exploration in the traditionally tightly regulated Asian powerhouse.
It follows from a technical agreement between the two parties signed in November of last year, when they committed to working towards a more formal agreement on exploration.
Under the deal, the companies will work together on identifying mineral targets both inside and outside of China, but the first order of business will be targets within the Asian country.
“The immediate priority for the joint venture will be mineral targets in China … the future collaboration of the parties will expand to exploration of global resources,” says the release.
Rio Chief Executive Jean-Sebastien Jacques was quoted as saying that the formalization of the joint venture is an “important milestone in (Rio’s) growing partnership with China and Minmetals, who is an increasingly important player in the global mining industry.
“Our complementary strengths in exploration put us in the best possible position to find metals and minerals essential to human progress,” he added.
According to the company, the registered capital of the venture will be US$31.3 million, with initial contributions of US$5.5 million from each of the partners within six months.
Minmetals President Guo Wenqing lavished praise on Rio, saying the company has rich prospecting experience worldwide, which will benefit Minmetals with its solid technical expertise.
“The two strong partners will drive breakthroughs, pioneer progress, and promote the exchanges and collaboration of the global resource industry,” said Wenqing.
The backbone of Rio Tinto, which is the world’s second-largest miner, is iron ore — a vital commodity to the growing Chinese economy. Meanwhile, Minmetals has interests ranging all across the base metals spectrum, but mostly produces copper, zinc and nickel.
Having such a large foreign company participating in exploration in China will no doubt turn heads — the Asian country has so far been a difficult place for foreigners to invest in, with the nation preferring to allow outside companies to partner with its businesses operating overseas.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.