Rio Tinto and Minmetals have agreed on a collaboration on mineral exploration. China Minmetals Corp and Rio Tinto signed an outline deal on Tuesday for a partnership. Both firms believe this will help find the mineral reserves required to maintain today’s economy.
Exploration is an expensive thing, and mining companies have been looking for ways of maximizing their exploration budgets to ensure ongoing searches for new mineral deposits. This is particularly the case with China. As the Chinese economy grows, it is becoming increasingly necessary to meet its needs regarding its consumption of minerals and other commodities.
Rio Tinto and Minmetals complement each other. Minmetals is becoming increasingly more significant in the global mining industry. Rio Tinto CE J-S Jacques stated this while expressing his anticipation on working with the company in mineral exploration. He stated that the strengths of the two companies complement each other. A combined effort would “help secure mutual global opportunities for quality resources” according to He Wenbo, Chairman of the China Minmetals Corporation.
By forming partnerships, it is possible for large mining companies to achieve levels of exploration not possible since the 2015-2016 crash of commodity pieces. The possibility of individual mining companies finding new large mineral deposits is decreasing. Partnerships can make this more likely by making more exploration cash available. Also more flexible mining operations.
Rio Tinto is the world’s second largest mining company in terms of market capitalization. China Minmetals is one of the biggest trading companies in the world for minerals and metals. Not only that, but it is also the largest iron and steel trading company in China
Rio Tinto depends a great deal on iron ore. This bulk commodity, with its high profit margins, provides a large part of its revenue. Chinahas a decreasing need for steel and is able to recycle much of the steel already in circulation in the country. Consequently, China is now focusing more on aluminum and copper. It is also seeking metals needed for battery manufacture rather than construction metals.
Tuesday’s deal will enable Rio Tinto and Minmetals to get together and set up exploration teams. These teams will identify areas of exploration to focus on, and make the most of the combined expertise of each company.
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