JOHANNESBURG (miningweekly.com) - Diversified miners BHP Billiton and Rio Tinto have signed a binding agreement in terms of their Australia iron-ore joint venture (JV), announcing on Monday that they expected the JV to be completed in the second half of next year.

BHP and Rio, in June, signed a nonbinding agreement to establish the JV, which would encompass all current and future Western Australian iron-ore assets and liabilities, with BHP expected to pay Rio $5,8-billion to take its interest in the JV to 50%.

The deal was expected to result in more than $10-billion in synergies.

However, the deal had been heavily opposed by steelmakers, which say that the combined BHP/Rio entity and Brazil's Vale would control 70% of the world's seaborne iron-ore exports.

There had also been some speculation that Rio wanted to pull out of the deal.

Nevertheless, the parties had met their December 5 deadline to sign a binding agreement.

"Signing binding agreements brings us one step closer to unlocking the full production potential of our Pilbara iron-ore assets and achieving substantial benefits for all our stakeholders," Rio Tinto CEO Tom Albanese said in a statement.

He emphasised that the completion of the JV was a priority for the diversified miner in 2010.

"We are very pleased to now have formal and binding agreements in place to develop this important JV. With the history of both companies` attempts to join together these two world-class iron-ore operations in Western Australia at various times, this deal has effectively been more than a decade in the making," BHP Billiton CEO Marius Kloppers added.

The JV was expected to deliver substantial synergies through the combination of the adjacent mines into single operations; reducing costs through shorter rail hauls and more efficient allocations of port capacity; and blending opportunities, which would improve product recovery and provide further operating efficiencies.

Further, the JV would develop consolidated, larger and more capital efficient expansion projects, while also combining the management, procurement and general overhead activities into a single entity.

BHP and Rio said that they had now also filed submissions with the European Commission and the Australian Competition and Consumer Commission for regulatory approval of the JV.

The regulatory and shareholder approvals were expected to be concluded by the second half of next year.

The companies added that the only changes made between the signing of the nonbinding and the binding agreements, had been the decision not to jointly market their Australian iron-ore.

BHP and Rio announced in October that they would separately market all production from the proposed JV, amid growing concern from the steel industry.

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