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Rio Tinto has renewed its long-term partnership with the Madagascan Government on the sustainable operation of its QIT Madagascar Minerals (QMM) mine.

Reaching an agreement on future fiscal arrangements for QMM in Fort Dauphin, the deal is set to enhance the benefits received by the people of Madagascar and support a sustainable future for the QMM mine.

“Rio Tinto is committed to the responsible development of its mineral sands extraction business in Madagascar,” Rio Tinto iron and titanium managing director Sophie Bergeron said.

“This agreement is a significant milestone to support a long-term future for QMM and reaffirms our commitment to provide increased benefits for all parties, including the communities of Madagascar.”

The royalty rate will increase from two per cent to 2.5 per cent and QMM will issue its first dividend to the Madagascan Government this year.

An amount equalling the $US12 million ($18.7 million) dividend will be invested by the Madagascan Government in the 109km rehabilitation project of the National Road 13 (RN13).

Rio Tinto has committed to contributing a further $8 million to the road project, which will allow the movement of people and critical supplies to hard-to-access areas.

“We are privileged and honoured to be operating in Madagascar and we thank the country and its people for their trust,” Bergeron said.

Rio Tinto has agreed to cancel $US77 million ($120 million) in advances made to the Madagascan Government to finance funding of QMM.

Madagascar will now hold a 15 per cent free carry ownership of QMM and maintain its two per cent voting right, with no obligation to contribute to capital funding or exposure to dilution.