Mining giant Rio Tinto announced a huge iron ore deal with China’s state-run Chinalco (中國鋁業) yesterday, days before four if its staff go on trial in a case that has threatened diplomatic and trade ties.
Rio said Chinalco signed a non-binding, US$1.35 billion deal to help develop a massive mine in Guinea, drawing a line under a period of turbulent relations with its biggest shareholder.
“We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit,” Rio chief executive Tom Albanese said.
PHOTO: REUTERS
The debt-strapped Anglo-Australian miner snubbed a US$19.5 billion cash injection from Chinalco last June, angering some Chinese commentators.
Weeks later, China’s spy agency swooped on Australian citizen Stern Hu (胡士泰) and three Chinese colleagues in Shanghai, prompting a rapid plunge in relations with Canberra and sending shudders through China’s foreign business community.
Hu, Wang Yong (王勇), Ge Minqiang (葛民強) and Liu Caikui (劉才魁) are scheduled for a three-day trial in Shanghai from Monday over alleged bribery and industrial espionage.
Australia yesterday insisted business with China, now its biggest trading partner, would not be harmed by the trial.
“The two matters are separate,” Trade Minister Simon Crean told public broadcaster ABC. “We are treating the Stern Hu case strictly as a consular case. We’ve never sought to make any link and neither have the Chinese in their discussions with us.”
However, Australian Prime Minister Kevin Rudd has already warned that the “world will be watching.”
Guinea’s Simandou mine, long mired by political upheaval, is described as the world’s best undeveloped source of high-grade iron ore, which is being consumed in vast quantities by industrializing China.
Analysts say the 110km seam could produce 200 million tonnes a year, matching Rio’s entire Western Australia Pilbara operation. Chinalco will acquire a 47 percent stake in the project.
“It’s a world-class monster. It’s a gorilla of a project,” James Wilson, a research analyst with stockbroker DJ Carmichael, said earlier this week.
Rio said the project, which involves building a mine, railway and port, would create tens of thousands of jobs in the country during construction and some 4,000 full-time posts when operations start.
“Chinalco brings its own skills and capabilities in major projects and access to the infrastructure expertise of other Chinese organizations,” Albanese said.
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