Japan’s Mitsui acquires a stake in Rio Tinto’s iron ore project

The company will acquire 40% of shares in the Australian Rhodes Ridge

Japanese trading house Mitsui & Co has announced that it will acquire a 40% stake in Australia’s Rhodes Ridge iron ore project for $5.34 billion to strengthen its long-term profit base, Reuters reports.

Mitsui will acquire all 25 percent of VOC Group’s shares in Rhodes Ridge and has signed an agreement with AMB Holdings to acquire a 15 percent stake. AMB will retain a 10% stake in the project, which is operated by Rio Tinto (50%).

Rhodes Ridge is one of the world’s largest undeveloped ore deposits. According to Mitsui, its reserves amount to 6.8 billion tons of mineral resources. The Japanese company noted that it has been involved in the development of the mining industry in Western Australia, where the project is located, since the 1960s and has extensive experience in this area. Production at the field is planned to begin by 2030.

According to Mitsui CEO Kenichi Hori, the deal, which is the largest investment in the company’s history, is the result of long-term efforts to increase ore production, which is a key driver of business growth. He added that the deposit’s proximity to existing iron ore projects reduces capital costs and risks.

Its 40 percent stake in Rhodes Ridge is expected to initially produce 16 million tons of iron ore per year, and after further expansion, it is expected to grow to over 40 million tons, which will increase operating cash flow by ¥100 billion and ¥250 billion, respectively.

In fiscal year 2023/2024 (ended March 2024), Mitsui’s annual equity share of iron ore production amounted to 61 million tons, thanks to investments in Vale and partnerships with Rio Tinto and BHP.

Mitsui expects to save money by utilizing existing infrastructure between Rhodes Ridge and the neighboring Rio Tinto Robe River project, in which it also has a stake. Raw materials from the deposit will be blended with ore sold by Rio Tinto and exported to Asian countries, including Japan.

Mitsui’s portfolio includes metals resources, energy, machinery and products.

As GMK Center reported earlier, Japanese steelmaker Nippon Steel and trading house Sojitz will acquire a 49% stake in Champion Iron’s Canadian iron ore project for $152 million. The companies will own 30% and 19% of the shares, respectively, and will share development and construction costs in accordance with their share in the mine.