Rio Tinto (NYSE:RIO) has paid $1.43 million to Kilo Goldmines to enter into a joint venture at the Isiro Iron Ore Project in Orientale Province, Congo. This payment, due on December 31, 2012, was part of the April 2011 agreement between Rio Tinto and Suez Holdings Limited. Since the payment was made in advance, Rio Tinto received a discount of about $72,000. Rio Tinto has acquired a 15 percent equity interest in the joint venture company from Suez, which brings the present holding of Suez to 10 percent and Kilo’s stake remains unchanged at 75 percent. 
Rio Tinto is a global diversified miner with a product portfolio spanning basic metals like iron ore, copper and aluminum to energy products like coal and uranium. It competes with other mining giants like Vale (NYSE:VALE) and Freeport McMoran (NYSE:FCX), Barrick Gold (NYSE:ABX).
The investment will help Kilo fund the development of its Somituri project in 2012. With the investment, Rio Tinto’s push to raise its iron-ore production continues. Although the miners have to push to develop the additional resources, they may also face the risk of iron-ore oversupply, going forward. Rio Tinto and BHP have already reduced their Q1 iron-ore prices considering the loss in demand and the resentment from Chinese importers. The company’s iron-ore lump contract price for the first quarter was $0.106 per dry metric ton.
Rio Tinto Declares Force Majeure
Force Majeure is a legal clause that a company can enforce should it miss to meet deliveries due to circumstances beyond its control. Rio Tinto may lose out on producing close to 1,400 tons per day due to these on-going issues. With the aluminum prices already under pressure, this may hurt Rio Tinto’s aluminum business even further.Notes: