Chinese steel giant Sinosteel Corporation and Australia's Rio Tinto signed an agreement Friday to extend their cooperation at the Channar iron ore project.

From 2012 to 2017, the project will produce an additional 50 million tonnes of ore every year while Sinosteel sells the products in China, said Sinosteel president Huang Tianwen.

The Channar mine is located in the Pilbara region of Western Australia. Under the original agreement signed in 1987, the project was to produce 200 million tonnes of ore by the second quarter of 2012.

The project is the first major mining investment in Australia by a Chinese company. It began operation in 1990. It had supplied 183 million tonnes of iron ore to China by the end of November.

The agreement marks the establishment of a strategic and cooperative relationship between China's largest iron ore trader and the world's leading iron ore supplier, said Huang.