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BHP Group and Rio Tinto Group, the world\u2019s two biggest mining companies, are poised to join forces in Australia\u2019s Pilbara iron ore hub to produce up to 200 million tons of the steelmaking material from next decade.<\/p>\n
The two miners will consider collaboration on two projects \u2014 Rio\u2019s Wunbye deposit and BHP\u2019s Yandi \u2014 to boost production over the longer term, according two non-binding agreements announced in a joint statement on Thursday.<\/p>\n
\u201cTogether we will extend the life of these operations,\u201d Rio\u2019s Iron Ore Chief Executive Officer Matthew Holcz said in the statement. \u201cWe can better leverage existing infrastructure to unlock additional production with minimal capital requirements.\u201d<\/p>\n
While the world\u2019s mining giants are increasingly pivoting to copper and other metals needed for the energy transition, they\u2019re still looking for ways to sustain iron ore revenues. Huge volumes of the steelmaking material are needed to feed demand from Asian economies that are expanding as China\u2019s infrastrucutre boom fades.<\/p>\n
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Rio is the biggest iron ore miner in the Pilbara, closely followed by BHP, and the two together produce more than 600 million tons globally. The companies said the latest plans build on a 2023 agreement that allowed for mining across some tenements with shared boundaries.<\/p>\n
Thursday\u2019s announcement covers two memoranda of understanding: one to explore collaboration to develop Rio\u2019s undeveloped Wunbye deposit, the other for BHP to supply some output from an expanded portion of its Yandi mine for processing at Rio\u2019s facilities.<\/p>\n
First production from the joint projects would arrive early next decade, they said. The figure of 200 million tons refers to total output and the statement didn\u2019t give details on potential annual production.<\/p>\n
The Pilbara has long been the mainstay of global iron ore production, sending billions of tons to China over the past quarter-century to feed the country\u2019s booming economy. However, miners like Rio and BHP are grappling with lower-quality ores, which translates into lower prices.<\/p>\n
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Miners are trying to balance growth against capital discipline, and are increasingly looking at ways to squeeze efficiencies out of existing infrastructure. Both Rio and BHP have also sought to sell non-essential infrastructure to release cash.<\/p>\n
BHP recently sold a major stake in its power network, which fuels its iron ore operations, for $2 billion to BlackRock\u2019s Global Infrastructure Partners LP, to channel funds into priority areas such as copper.<\/p>\n
BHP shares were up 3% in Sydney at 12:41 p.m. local time, while Rio rose 0.8%, as miners benefited from this week\u2019s rally in metals prices.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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