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LONDON, UK / ACCESSWIRE / January 19, 2017 / Active Wall St. blog coverage looks at the headline from mining giant Rio Tinto PLC (NYSE: RIO) as the company and Aluminium Corporation of China (Chinalco) have decided to end their six-year old partnership. Both companies had formed a Joint Venture Chinalco/Rio Tinto Exploration in a quest to find copper deposits in China. Bloomberg news agency was the first to confirm and report the news on January 18, 2017. Register with us now for your free membership and blog access at:

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One of Rio Tinto's competitors within the Industrial Metals & Minerals space, VALE S.A. (NYSE: VALE), is estimated to report earnings on February 23, 2017. AWS will be initiating a research report on VALE following the release of its next earnings results.

Today, AWS is promoting its blog coverage on RIO; touching on VALE. Get all of our free blog coverage and more by clicking on the links below:

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The Joint Venture

Rio Tinto and Chinalco had signed a Memorandum of Understanding in December 2010 to form an exploration Joint Venture (JV) in China. The JV Company Chinalco/Rio Tinto Exploration was officially started in November 2011. Rio Tinto owned 49% stake in the JV Company and the remaining 51% stake was owned by Chinalco. The JV Company focused on the northern Xinjiang, Inner Mongolia, and Heilongjiang provinces for its explorations.

The JV Company would initially focus on finding copper and later on expand the exploration to include coal and potash. Bloomberg shared that the media spokesperson for Chinalco confirmed that the JV Company was being disbanded, but did not provide any further information. Rio Tinto also did not make any official statement on the matter. However, on January 17, 2017, when Rio Tinto disclosed its Q4 2016 production results, it revealed that it has discontinued exploration work in China, India, and Mexico.

Rio Tinto and Chinalco's Simandou Venture

In October 2016, Rio Tinto sold off its stake in the Simandou project in Guinea to Chinalco. The deal was valued between $1.1 billion ? $1.3 billion and Rio Tinto will realise the money only after the mine starts commercial production and the output realized from it. Simandou is the largest iron ore mining project and Rio Tinto owned 46.6% stake in Simandou South. Rio Tinto has acquired the entire deposit in early nineties and has already spent more than $3 billion on the development of the site. In February 2016, it had written down the value of its stake at Simandou by $1.1 billion.

In November 2016, Rio Tinto sacked two of its senior executives and launched an investigation into the matter, when it was revealed that $10.5 million were paid to a consultant in 2011 to help them acquire mining rights in Guinea.

Future outlook

Mining companies across the globe have drastically reduced their spending on exploration in the last few years. Most of the companies are reducing costs and looking to increase cash flows, in an effort to bolster their balance sheets. This holds true for Rio Tinto as well which had reduced its annual exploration budget by 14% and limited it to $497 million. In a recent report by S&P Global Market Intelligence, exploration budget of more than 1,580 companies across the globe have fallen by 21% on a year-on-year basis and is valued at $6.89 billion for 2016. The same report also reveals that the exploration spending in China has also fallen by 27% to $394 million in 2016.

In November 2016, Rio Tinto had revealed a long-term strategy of concentrating on a $5 billion productivity push and cash generation. It revealed that in 2016 it had made divestments valued at $1.3 billion. Apart from pushing productivity the Company plans to focus on growth projects ? Silvergrass (Iron Ore in Western Australia), Amrun (Bauxite in Queensland), and Oyu Tolgoi (Copper and Gold in Mongolia).

Despite the current situation, China is an important geography for Rio Tinto as the country is one of the largest customers for iron ore. Also, Chinalco is one of the major shareholders in Rio Tinto and holds nearly 10% of the Company's outstanding shares.

Stock Performance

At the close of trading session on January 18, 2017, Rio Tinto's share price finished yesterday's trading session at $43.33, rising 2.05%. A total volume of 4.12 million shares exchanged hands, which was higher than the 3 months average volume of 3.71 million shares. The stock has surged 36.22% and 40.85% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have gained 12.66%. The stock has a dividend yield of 3.48% and currently has a market cap of $79.36 billion.

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SOURCE: Active Wall Street