Rio Tinto Group, a British-Australian behemoth in the global mining industry, has signed its first yuan-denominated purchase contract as China looks to internationalize its currency and move more Chinese steel overseas, Yicai Global reported

London- and Melbourne-based Rio agreed to buy 170,000 tons of SP10 iron ore from Shanxi Gaoyi Steel, Shanghai Securities News reported today. It will collect the ore from Rizhao Port in Shandong province, the report said.

The move is likely a trial for the buyer as it is only purchasing SP10 products rather than its main PB powder and blocks, said Wang Yangwen, a global analyst at Standard & Poor’s Financial Services.

Rio Tinto is the third company to buy iron ore through yuan-based contracts, added Wang Guoqing, director of the Lange Steel Information Research Center. Brazil’s Vale has settled contracts in yuan regularly since 2017 and another Australian firm, Fortescue Metals, made its first yuan deal in June this year.

China is the world’s largest consumer and importer of iron ore and brought in a billion tons in 2018, with 724 million coming from Australia.

“Yuan pricing reduces the risk of foreign exchange settlement for Chinese companies,” Wang said, adding that this “cuts the losses caused by exchange rate fluctuations and lowers the cost of transactions that use the American dollar as an intermediary.”

Wang Yangwen agreed, saying the contracts help Chinese firms that do not settle dollar deals as the prices are closer to those in the local market.

Meanwhile, Rio Tinto said it has found a potentially large source of lithium for electric car batteries while looking for gold in piles of waste rock in California, describing it as a “eureka moment” for the company, Financial Times reported.

The London-based miner said it could become the largest producer of lithium for batteries in the US if it can successfully process the rock on a larger scale.

The discovery may pave the way for Rio’s entry into the lithium market, which is set to see dramatic growth over the next decade due to the rise of electric vehicles, which are powered by lithium-ion batteries, the report said.

Lithium is currently produced in South America and Australia and is controlled by five producers, two of whom are Chinese. But the administration of President Donald Trump is keen to encourage domestic supply to meet the needs of its carmakers.