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Commodities

Rio Tinto, China Baowu in $2bn deal to develop Australia iron ore

Partnership formed despite strained ties between Beijing and Canberra

A lump of iron ore mined from the Pilbara region of Western Australia. Rio Tinto and China Baowu Steel Group are jointly developing an iron ore project in this area for $2 billion.   © Reuters

(Reuters) -- Rio Tinto Ltd said on Wednesday it would team up with its biggest customer China Baowu Steel Group to develop an iron ore project in Western Australia for $2 billion as it looks to prop up its production from the Pilbara region.

The deal comes amid fraught ties between Australia and China -- the world's top exporter and buyer of iron ore, respectively -- with a recent push by Beijing to centralize purchases of iron ore stoking worries of a hit to mining giants such as Rio, BHP Group and Fortescue Metals.

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