BHP Billiton has announced the signing of the JFE Western 4 Joint Venture with JFE Steel and its existing Yandi joint venture partners, ITOCHU Minerals & Energy of Australia and Mitsui Iron Ore Corporation, which will secure long-term sales contracts worth approximately $US4.3 billion.
The JFE Western 4 joint venture involves a sub-lease over the Western 4 deposit within BHP Billiton's Yandi mine in Western Australia's Pilbara region and the sale of approximately 16 million wet tonnes per annum (Mtpa) over the next 11 years.
The joint venture involves the joint technical development and commercialisation of 169 million tonnes of Lower Channel Iron deposit (LCID) pisolite iron ore, which has not previously been used in the steel-making process. Development of these reserves will also extend the life of the Yandi mine.
Under the joint venture, JFE Steel will take a 20 per cent interest in the sub lease, which has a reserve of 115 million tonnes. BHP Billiton will retain a 68 per cent interest, with Japanese joint venture partners ITOCHU Minerals & Energy of Australia and Mitsui Iron Ore Corporation retaining 6.4 per cent and 5.6 per cent interests respectively.
BHP Billiton president and chief operating officer Western Australia Iron Ore Ian Ashby said the additional sales and purchase commitments reflect the value of the strategic relationships BHP Billiton has developed with the Japanese steel mills.
"Our Japanese customers provided the basis for BHP Billiton's investment in the Pilbara during the 1960s through joint ventures, which were essential to mitigate the risk of the large capital outlays required to develop the vast iron ore resources," he said.
"Since those early days, BHP Billiton has continued to build a strategic relationship with the Japanese steel mills, which has led to the development of the new generation of Pilbara ores, including the Yandi 'Pisolite' resources in 1991.
"Market acceptance of Yandi's Pisolite is a direct result of testing undertaken by BHP Billiton and the Japanese steel mills in the late 1980s when there was a negative view that Pisolite iron ore was unsuitable for steel making.
"Since the first commercial shipment of Yandi ore in 1992, production has increased every year to more than 40Mtpa. This latest joint venture will help ensure BHP Billiton maintains its share of the growing iron ore market."