On 4 June 2009 Rio Tinto and BHP Billiton signed a non-binding agreement to establish a production joint venture covering the entirety of both companies’ Western Australian iron ore assets. The joint venture will encompass all current and future Western Australian iron ore assets and liabilities and will be owned 50:50 by BHP Billiton and Rio Tinto. The joint venture is expected to unlock significant value from the companies’ overlapping, world-class resources. Both companies believe the net present value of these unique production and development synergies will be in excess of USD 10 billion (100%). These substantial synergies are anticipated to come from: combining adjacent mines into single operations; reducing costs through shorter rail hauls and more efficient allocations of port capacity; blending opportunities which will maximise product recovery and provide further operating efficiencies; optimising future growth opportunities through the development of consolidated, larger and more capital efficient expansion projects; and combining the management, procurement and general overhead activities into a single entity. The joint venture will operate as a cost centre and deliver iron ore, in equal volumes, to ships designated by BHP Billiton and Rio Tinto to sell independently through their own marketing groups. In order to equalise the contribution value of the two companies, BHP Billiton will pay Rio Tinto USD 5.8 billion for equity type interests at financial close to take its interest in the joint venture from 45% to 50%. Senior management of the entity will be determined jointly on the basis of the “best person for the job” with broadly equal participation from Rio Tinto and BHP Billiton.