Mining giants Rio Tinto and BHP on Thursday said they planned to collaborate to extract up to 200 million metric tons of iron ore from two adjoining sites in Western Australia's Pilbara region.
The duo will join forces to develop their Yandicoogina and Yandi sites, Rio Tinto said in a statement on its website.
Pilbara's famous iron ore resources have been a major source of growth for the Australian economy, but miners are now looking at ways to cut costs as new global supplies come on stream, such as Guinea's Simandou mine - in which Rio also has a stake.
The two miners will work together to develop Rio Tinto's Wunbye deposit and to process ore from BHP's Yandi site at Rio Tinto's facilities.
"Together we will extend the life of these operations, create additional value, and further support Western Australian jobs and local communities," said Rio Tinto's iron ore chief executive Matthew Holcz.
The companies expect the first ore to be mined early next decade, subject to a final investment decision.
Tim Day, who heads up BHP's Western Australian iron ore operations, said sharing infrastructure and cost would benefit both companies. "This is a clear example of productivity in action - unlocking new opportunities by making the most of our existing resources," he said in a statement.
Reporting by Frank Prenesti for Sharecast.com