Fortescue Metals Group has finalized a joint venture agreement with a wholly owned subsidiary of China"s largest steel mill, Shanghai Baosteel Group Corporation, to explore and potentially develop a targeted one billion tonne prospective magnetite deposit within Fortescue"s tenement areas in the Pilbara region of Western Australia.

The agreement relates to specific land tenement areas close to the Fortescue rail corridor between the company's Cloud Break mine site and Port Hedland.

Baosteel will fund the exploration of the prospective areas and, if approved by a joint operating committee of the joint venture, will then fund the pre-feasibility and definitive feasibility studies.

Fortescue's executive director commercial Russell Scrimshaw says the agreement further secures the strong relationship between the two companies. "While Fortescue is very much focused on developing its direct ship marra mamba operations, the fact that Baosteel is also interested in magnetite development opportunities and is prepared to use its financial strength and technical expertise to facilitate such development, creates a classic 'win - win' for both groups".

"We see this joint venture as further proof of the increased opportunities available to all industry participants through co-operation and sharing of skills and resources.

"We believe the Pilbara offers enormous potential for exploration of all types of mineralization and the creation of an open access port and rail system by Fortescue is increasingly giving companies the confidence to pursue these opportunities."