JOHANNESBURG (miningweekly.com) – Diversified giant Rio Tinto has reached an agreement with Iron Ore Holdings (IOH) to buy up to 1,5-million tons of ore a year from the junior miner’s Phil Creek deposit in Australia.

Rio Tinto would transport the iron-ore to the coast for shipment as part of its product suite.

“This is a significant development for Rio Tinto, IOH and the Pilbara generally. It is a prime example of how a major established producer and a small, progressive junior can work together to achieve an excellent outcome for all stakeholders,” said Rio Tinto Iron Ore CEO Sam Walsh.

Rio Tinto and IOH initially on the mine-gate sale in mid-2008. At the time, Walsh said that the deal was a “preferred alternative” to the growing demands from government and industry for access to its rail infrastructure.

The government had ruled last year that Rio Tinto and BHP Billiton had to allow third parties access to their rail infrastructure in west Australia.

Rio Tinto also said on Tuesday that it might buy an undeveloped mine from IOH.

The company entered an exclusive agreement with IOH to examine its Iron Valley deposit, situated about 10 km from its Yandicoogina operation, in Western Australia. This might lead to the purchase of part or all of the lease covering the deposit.

“Rio Tinto welcomes the opportunity to also examine the larger Iron Valley deposit and establish whether it can be best developed within our integrated system of 11 mines, 1 300 km rail network and three ports in two locations,” added Walsh.