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LONDON (Reuters) - Rio Tinto (RIO.L) (RIO.AX) and China Minmetals Corp on Tuesday signed an outline deal on collaboration in mineral exploration, saying the partnership would position it to find the reserves needed for today's economy.
Major miners have been seeking ways to maximise exploration budgets and they have also been analysing the sustainability of their portfolios as the needs of China, the world's biggest commodity consumer, change as its economy matures.
"Minmetals is rapidly becoming an important player in the global mining industry and we look forward to partnering with them," Rio Tinto Chief Executive J-S Jacques said in a statement.
"Our complementary strengths in exploration across the globe put us in the best possible position to find the metals and minerals that are essential to our modern lives."
Partnership with the "fast-growing" Minmetals would "help secure mutual global opportunities for quality resources", China Minmetals Corporation Chairman He Wenbo said.
Partnerships can maximise exploration budgets that mining companies reduced in response to the commodity price crash of 2015-16. The big miners are unlikely to restore budgets to pre-slump levels as the chances of finding large new reserves diminish.
More flexible arrangements can also increase the range of commodities to which miners have exposure.
Rio Tinto, the world's second-biggest listed miner by market capitalisation, and No. 1 BHP (BHP.AX) (BLT.L) are particularly dependent on iron ore for revenues as a bulk commodity with high profit-margins.
It is used in steel-making, but demand has faltered as China has already built much of the infrastructure it needs and can also recycle steel in circulation. Its focus is shifting towards minerals such as copper, aluminium and battery materials for electric vehicles.
Following Tuesday's deal, Rio Tinto and Minmetals will work on the detail of establishing joint teams to identify targets for exploration collaboration, the statement said.
China Minmetals is one of the largest metals and minerals trading companies in the world and the largest iron and steel trader in China.
Reporting by Barbara Lewis in London and Rahul B in Bengaluru; editing by Jason Neely and Susan Thomas