| Rio Tinto and Chinalco iron ore joint venture |
A$1.48bn |
|
|---|---|---|
| Rio Tinto and Chinalco have entered into a non-binding memorandum of understanding in respect of a joint venture to develop and operate the Simandou iron ore project in Guinea. | ||
| Firm | Client | Role |
|
Allens Arthur Robinson |
Rio Tinto | Australian counsel |
|
Baker & McKenzie |
Chinalco | International counsel |
It’s no wonder that law firms love extended corporate manoeuvrings – especially where multi-national corporations and multi-billion-dollar projects are involved. Take the case of Allens and Bakers and the hundreds of billable hours they’ve racked up for Rio Tinto and Chinalco as the two energy & resources giants have explored stake acquisitions, a takeover, and now a JV in West Africa.
Mining giant Rio Tinto has entered into a new chapter with Chinalco following its decision to reject Chinalco’s US$19.5bn bid last year. The two parties have now made plans under a memorandum of understanding (MoU) to develop and operate the Simandou iron ore project in Guinea. This includes rail and port infrastructure as well as the mine itself.
“We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit,” said Tom Albanese, chief executive at Rio Tinto. “Chinalco brings its own skills and capabilities in major projects and access to the infrastructure expertise of other Chinese organisations. We believe the Simandou project is a large-scale, long-life asset and is the single best undeveloped source of high-grade iron ore.”
This is considered to be a world-class iron ore project and an important part of Allens Arthur Robinson’s relationship with Rio Tinto is its ability to work with it on global transactions, said Scott Langford, partner at Allens Arthur Robinson. In the past 18 months, the law firm has worked with Rio Tinto on matters spanning Asia, Africa, Europe and North and South America, as well as Australia.
Under the terms of the MoU, Rio Tinto’s interest in the Simandou project will be held in a new joint venture, in which Chinalco will acquire a 47% interest on an earn-in basis through sole funding of development expenditure. Once Chinalco has paid US$1.35bn for its interest, the Rio Tinto and Chinalco effective interests in the project will be 50.35% and 44.65% respectively. The International Finance Corporation will hold the remaining 5%.
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