(Yicai Global) Sept. 14 -- China Baowu Steel Group, the world’s largest steelmaker, and global mining giant Rio Tinto will invest USD2 billion in a new joint venture to develop an iron ore mine in western Australia.

Rio Tinto will own 54 percent of the JV that will develop the Western Range project in Pilbara, the London-based miner said in a statement today. Baowu will own the rest. Construction should start early next year and production -- 25 million tons of iron ore a year -- is due to begin in 2025.

Under an iron ore sales deal they also inked, Baowu will buy as much as 126.5 million tons of iron ore over about 13 years, representing the Shanghai-based firm’s share of the anticipated 275 million tons the JV is expected to extract from Western Range.

“This is a very significant milestone for both Rio Tinto and Baowu, our largest customer globally,” Simon Trott, chief executive of Rio Tinto Iron Ore, said in the statement.

“We have enjoyed a strong working relationship with Baowu for more than four decades, shipping more than 200 million tonnes of iron ore under our original joint venture, and we are looking forward to extending our partnership at Western Range,” he said.

Trott added that “Rio Tinto and Baowu continue to work together on low-carbon steelmaking research, exploring new methods to reduce carbon emissions and improve environmental performance across the steel value chain.”

After acquiring a number of Chinese steel companies, including Magang Group Holding and Taiyuan Iron and Steel Group, Baowu’s crude steel production rose to 120 million tons last year, putting it first in the world for a second straight year, according to the World Steel Association.

Editor: Futura Costaglione