Fortescue Chief Executive Officer (CEO) Nev Power holds a piece of iron ore
Fortescue Chief Executive Officer (CEO) Nev Power holds a piece of iron ore in front of a remote-controlled truck at the Fortescue Solomon iron ore mine located in the Sheila Valley, around 400 km (249 miles) south of Port Hedland in the Pilbara region of Western Australia, December 2, 2013. Reuters/David Gray

Fortescue Metals Group Limited inked an Iron Ore Sale and Purchase Agreement with Australian Aboriginal Mining Corporation Pty Ltd on Monday, the company announced in a statement.

The five-year deal will allow the indigenous-owned AAMC to transport up to two million tonnes of iron ore yearly from its Pilbara mining operation through Fortescue’s world-class port or rail facilities. Fortescue can then purchase the iron ore or sell it on behalf of AAMC.

The agreement will help create Australia’s first Aboriginal owned and operated iron ore mine.

“Today’s agreement underlines very clearly Fortescue’s commitment to provide meaningful opportunities for Aboriginal business development. The company is focused on building up Aboriginal communities through full economic participation rather than passive welfare,” said Fortescue CEO Nev Power.

Indeed, the company’s Billion Opportunities program has awarded more than AU$1.8 billion in contract value to Aboriginal businesses and joint ventures. Fortescue’s workforce is 13 percent Aboriginal.

“ This is a great outcome for both AAMC and Fortescue, a fantastic result for our shareholders and an important step for the continued advancement of Aboriginal peoples in the Pilbara that will now see them sharing in the wealth that is generated on their traditional lands," said AAMC chairman Daniel Tucker in a post by The Australian .

Resources analyst Tim Treadgold said that the agreed two million tonnes per annum is a small operation, calling it a “socially important announcement and not a financially important announcement.”

Infrastructure in mining sites can make or break a mining company as it can significantly decrease production costs and make the overall operation efficient. Amur Minerals Corporation ( London AIM: AMC ), a challenger in the nickel supply segment with its Kun-Manie mine in Far East Russia, plans to build its smelting facilities to slash production costs and increase its mine life to 15 years. Amur CEO Robin Young said that it can also increase the company’s revenue threefold.

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