Mining company Rio Tinto says it has signed a deal with China to develop a massive iron ore project in West Africa.
China's state metals group Chinalco will pay more than $1.3 billion (Ôé¼954 million) for a 47 per cent stake in the Simandou project in Guinea.
The deal to develop Simandou, one of the world's biggest undeveloped iron ore deposits, covers rail and port infrastructure as well as the mine itself.
The site in south-east Guinea, West Africa, has been compared to Western Australia's Pilbara region in terms of potential. The venture is expected to have a capacity of 70 million tonnes per year in the first phase of development.
Rio Tinto has estimated that total development costs will run to around $6 billion (Ôé¼4.4 billion).
Rio Tinto owns 95 per cent of the Simandou project, which is believed to hold 2.25 billion tonnes of iron ore. The remaining five per cent is owned by the World Bank.
The Anglo-Australian company has already spent more than $600 million (Ôé¼440 million) on exploration and development at Simandou. The project currently employs over 1,000 people.
The mine, rail and port plan for Simandou anticipates creating tens of thousands of jobs during the construction phase and more than 4,000 full-time jobs during the operational phase.
Tom Albanese, chief executive of Rio Tinto said: "We have long believed that Rio Tinto and Chinalco could work together on major projects for mutual benefit.
ÔÇ£Chinalco is an excellent partner for us in Simandou. Chinalco brings its own skills and capabilities in major projects and access to the infrastructure expertise of other Chinese organisations.ÔÇØ
He concluded: ÔÇ£We believe the Simandou project is a large scale, long life asset and is the single best undeveloped source of high grade iron ore. By working with Chinalco and the IFC we expect to realise great economic and social benefits for Guinea, and great value for our shareholders."
The Guinean government holds an option to buy up to 20 per cent of the project, which if taken up, would proportionally reduce the effective interests of Rio Tinto, Chinalco and the World Bank in the project.
The relationship between Rio Tinto and the Guinean government has sometimes been problematic. In 2008, the government moved to award two of the four exploration zones at Simandou to a rival company.
The two parties are still discussing the issue; however, the identified iron ore resource at the project is in the two zones that are not in dispute.
