Six months ago, giant diamond miners BHP Billiton and Rio Tinto signed an agreement of principles with the aim of establishing a production joint venture for all of both companies' Western Australian iron ore assets. The mining companies have now announced that on December 5 they signed binding agreements relating to how the joint venture will operate.



The diamond mining companies stated that they also filed submissions with the European Commission and the Australian Competition and Consumer Commission in connection to the joint venture and intend to submit filings to other relevant jurisdictions shortly. The mining companies noted their understanding that the European Commission will review the production joint venture under Article 101. Considering all of the obligatory regulatory review processes and shareholder approvals prior to the closing of the deal, mining giants BHP Billiton and Rio Tinto expect completion of the JV in the second half of 2010.



The joint venture encompasses all current and future Western Australian iron ore assets and liabilities and will be owned equally by BHP Billiton and Rio Tinto. The mining companies expect the deal to deliver substantial synergies due to the incorporation of the companies' Western Australian iron ore mining operations, with the aim of producing more iron ore at lower cost.



The two mining companies believe that the net present value of the new production and development synergies will exceed $10 billion.