Australia's first Aboriginal owned and operated iron ore mine has moved a step closer following an agreement with Fortescue Metals, but will only open when the commodity's price is high enough.

Fortescue Metals chief executive Nev Power has signed an agreement for Australian Aboriginal Mining Corporation to deliver two million tonnes of iron ore annually for five years from Western Australia's Pilbara.

AAMC will deliver the ore to Fortescue's rail or port facilities, at which point Fortescue can either purchase it or act as an agent for AAMC and sell it on.

Neither party said when mining will start, but AAMC said it will be "as soon as the prevailing commercial environment is supportive of such developments and funding activities have been sufficiently advanced".

The price of iron ore has crashed almost 70 per cent since early 2013 before rallying in the past two months to about $US58 per tonne.

"This is a great outcome for both AAMC and Fortescue, a fantastic result for our shareholders and an important step for the continued advancement of Aboriginal peoples in the Pilbara that will now see them sharing in the wealth that is generated on their traditional lands," said AAMC chairman Daniel Tucker, who is also on the Prime Minister's Indigenous Advisory Committee.

Fortescue, whose 2014/15 net profit dived 88 per cent on the plummeting iron ore price, said the agreement underlined its commitment to providing meaningful opportunities to Aboriginal business.

The company, founded by Andrew "Twiggy" Forrest, says about 13 per cent of its workforce is indigenous and that it has awarded more than $1.8 billion in contract value to Aboriginal businesses and joint ventures.

"Fortescue is proud to play a role in helping Aboriginal people seize the life-changing economic opportunities that mining can offer," Mr Power said.�