Some speculate the deal could repair Sino-Australian relations, but the venture marks a u-turn for the companies after Rio Tinto scrapped the $19.5 billion equity and asset it-up with the Chinese company.

But in this week’s turnaround, the companies are working together on a major project, with Rio Tinto putting its current 95 per cent holding in the Simandou iron ore project in Guinea into the new joint venture. The International Finance Corporation, the financing arm of the world bank, owns the remaining 5 per cent.

Chinalco, meanwhile, would invest $1.35 billion for 47 per cent stake in the venture, a 44.65 per cent interest in the project.

Allens Arthur Robinson has acted for long-standing client Rio Tinto on its non-binding memorandum of understanding with Chinalco, covering the development and operation of the Simandou iron ore project in Guinea.

The scope of the proposed joint venture with Chinalco covers rail and port infrastructure, as well as the mine, located in south-eastern Guinea and considered to be a world-class iron ore project.

“An important part of our relationship with Rio Tinto is being able to work alongside them on global transactions wherever and whenever required,” said the Allens partner leading a team of three from the firm, Scott Langford.

Under the terms of the MoU, Rio Tinto’s interest in the Simandou project will be held in a new joint venture, in which Chinalco will acquire a 47 per cent interest on an earn-in basis through sole funding of development expenditure.

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Langford said that, in the past 18 months, Allens had worked with Rio Tinto on matters spanning Asia, Africa, Europe and the North and South America, as well as Australia.

Baker & McKenzie, meanwhile, acted for Chinalco.

Rio Tinto had postponed development of the Simandou project in late 2008 when commodities markets fell.

Chinalco said in a separate statement that Rio Tinto would operate the joint venture but they would have an equal number of directors, with ore being sold to China, the world’s biggest steel-maker and importer of iron ore.