BHP (ASX:BHP,NYSE:BHP,LSE:BHP) and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) are collaborating to extract up to 200 million tonnes of iron ore under two non-binding memorandums of understanding.
The companies said on Wednesday (January 14) that mining and extraction will be performed at BHP’s Yandi and Rio Tinto’s Yandicoogina operations, which sit approximately 80 kilometres away from each other.
“This is a clear example of productivity in action — unlocking new opportunities by making the most of our existing resources,” said Tim Day, BHP Western Australia’s iron ore asset president.
“Together we will extend the life of these operations, create additional value, and further support Western Australian jobs and local communities,” added Matthew Holcz, Rio Tinto’s iron ore chief executive.
Under the agreement, BHP will also supply its Yandi Lower Channel deposit wet iron ore to Rio Tinto for processing at existing wet plants under agreed-upon commercial terms.
BHP’s Yandi is a part of an 85/15 joint venture between BHP, Mitsui & Co. (TSE:8031,OTCPL:MITSF) and Itochu (TSE:8001,OTCPL:ITOCF). It produced 257 million tonnes of iron ore in 2023, which BHP says is “enough to make steel for approximately 2,980 Sydney Harbour Bridges.”
The companies will also collaborate on the development of Rio Tinto’s Wunbye deposit, located at the Yandicoogina operation. Yandicoogina is one of Rio Tinto’s highest-producing iron ore mines, and according to the company was among the first to operate a fleet of autonomous haul trucks and drills.
“The operation produces Hamersley Iron Yandi fines — a product with low impurities that delivers a high-iron sinter — used by customers across East Asia and Southern China in their steelmaking process,” Rio Tinto states on its website.
For this partnership, BHP and Rio Tinto will progress a conceptual study, then an order of magnitude study.
Regulatory and joint venture approvals, along with engagement with traditional owners, will be required for any implementation. Subject to a final investment decision, first ore from both deposits is anticipated early next decade.
Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.