Rio Tinto said on Wednesday it would team up with its biggest customer China Baowu Steel Group to develop an iron ore project in Western Australia for $2 billion as it looks to prop up its production from the Pilbara region, reports Reuters.
The deal comes amid fraught ties between Australia and China—the world’s top exporter and buyer of iron ore, respectively—with a recent push by Beijing to centralize purchases of iron ore stoking worries of a hit to mining giants such as Rio, BHP Group and Fortescue Metals.
China’s outbound direct investment in Australia has seen a steady drop since 2016, with a meager $585 million investment in 2021 versus $11.54 billion in 2016, according to a report by accounting firm KPMG and the University of Sydney.
