Now is the time for the Robe River JV to make a move for CZR

Goldrock Capital believes Rio Tinto or the Robe Mesa JV could move to acquire CZR’s Robe Mesa project.

The Robe River JV partners consist of Rio Tinto (53%), Mitsui & Co. (33%), and Nippon Steel (14%). They own projects in the Robe Valley and the West Angelas Iron ore project in Newman, WA. West Angela’s is a troubled mine with a high production cost that produces upto 29 MTPA and has recently laid of several workers.

Additionally, several nearby iron ore expansion projects in the region owned by Rio have been scaled back amid failed expansion plans due to approval hurdles (native title and environmental). This potentially creates a shortfall in longer term supply for the robe valley JV, impacting offtake partners downstream operations, meaning they need to replace tonnes.

There’s a couple of reasons why they may pursue this acquisition:

1. CZRs Robe Mesa is located immediately north of Rio's Mesa F, a key part of the Robe Valley operations already operated by the JV.
The Robe River JV partners have a vested interest in integrating Robe Mesa into their existing operations to maximise logistical efficiencies and use shared infrastructure such as rail and port facilities.

2.The Robe River JV partners rely on consistent production to meet long-term offtake agreements tied to their ownership stakes:

Mitsui & Co. (33%) and Nippon Steel (14%) depend on Rio Tinto’s ability to deliver high-quality iron ore to their downstream operations in Japan.
Any decline in production from existing Robe Valley operations, or a reduction in capacity from other Pilbara mines like West Angelas, risks shortfalls in meeting these obligations.
Acquiring Robe Mesa would secure additional tonnes to ensure contractual commitments are met without disruption

3. It’s driven by desire for replacement of high-cost production.West Angelas, producing 29.5 Mtpa, is reportedly one of Rio Tinto’s highest-cost Pilbara mines.
By adding Robe Mesa to the Robe Valley operations, the JV can reduce reliance on higher-cost operations, maintaining competitive costs while sustaining production levels.

4. Its a High-Quality Resource substitute.

Robe Mesa’s ore is characterised by low-phosphorus, pisolitic iron, making it suitable for direct shipping ore (DSO), which is highly sought after by the JV’s steelmaking customers.Its proximity to Mesa F ensures the quality of blending aligns with the JV’s broader product portfolio.

5. Rio could extract more value than anyone else.

CZR Resources projected a production cost of A$57/wmt FOB for Robe Mesa under non Rio ownership. This is higher than the Robe Valleys existing operations (est - A$33/wmt). the JV can likely achieve significant cost savings by leveraging its existing infrastructure, lowering operating costs below CZR’s standalone projections.

Ultimately, The Robe River JV partners—Rio Tinto, Mitsui & Co., and Nippon Steel—are the most logical buyers for CZR’s Robe Mesa project. The acquisition aligns with their need to:

1) Sustain equity partner offtake volumes;

(2) Offset declining production from high-cost operations like West Angelas; and

(3) maintain their dominant position in the Pilbara region