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Beijing (AFP) Dec 3, 2010 Rio Tinto and Chinalco, China's largest alumina producer, on Friday signed a memorandum of understanding to set up a joint venture to explore resources in China, the Anglo-Australian mining giant said. The venture, in which Chinalco will hold a 51 percent stake while Rio will take the remaining 49 percent, will "explore mainland China for world-class mineral deposits", Rio said in a statement. "The combination of skills provided by Rio Tinto and Chinalco offers great potential to unlock value for mutual benefit," the statement quoted Rio chief executive Tom Albanese as saying at a signing ceremony in Beijing. The joint venture, expected to come into operation in the first half of 2011, will start with three to five large exploration projects and potentially move to additional regions later on. Rio will appoint the chief executive of the new venture, with the chairman of the five-member board nominated by Chinalco, according to the statement. "To build on our respective strengths and establish an exploration joint venture is a win-win measure that will deepen our cooperation and meet the challenges of the market," Chinalco president Xiong Weiping said. Chinalco is seeking to diversify from aluminium into other sectors such as coal, iron ore, rare earths and copper to become a global mining firm. Chinalco's listed unit Chalco and Anglo-Australian mining giant Rio Tinto in July signed a binding agreement to jointly develop a huge African iron ore field, with the Chinese company to invest 1.35 billion dollars in the project. Shanghai-listed shares of Chalco closed down 0.88 percent to 10.15 yuan (1.5 US dollars). Its Hong Kong-listed shares were up 0.14 percent at 7.12 Hong Kong dollar (91 US cents). The deal is also the latest sign of a recovery in Rio's relations with China, its biggest customer, after four of its staff were jailed in Shanghai for bribery and stealing commercial secrets earlier this year. The case, which followed Rio's decision to scrap a tie-up last year with Chinalco, its shareholder, rattled relations between Beijing and Canberra and stoked concerns among foreign investors about the rule of law in China. Also on Friday, Rio announced that the company and China's Sinosteel would extend their Channar iron ore joint venture in the Pilbara region of Western Australia to produce a further 50 million tonnes of ore per year. Under the original agreement signed in 1987, the Channar project, with Rio holding a 60 percent stake and Sinosteel the rest, was expected to produce a total of 200 million tonnes of ore by the first quarter of 2012. It currently has a capacity of 10 million tonnes per year.
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