Iron ore giant Fortescue Metals has signed a windfall $1.1 billion deal with a leading Taiwanese steel firm which promises to breathe new life into the company's beleagured joint-venture with China's' Baosteel.

The deal brings Taiwan’s Formosa Plastics Group into a partnership with Fortescue’s FMG Iron Bridge joint venture on a project which  will see 1.5 million tonnes of iron ore exported through Port Hedland by as early as 2015 in its initial stage, and a further 9.5 million during its second stage.

FMG Iron Bridge is a joint venture between Fortescue and Chinese steel titan Baosteel which was created 14 months ago following the spin off of some of Fortescue’s low-profile assets.

Sharp declines in spot prices for iron ore toward the end of last year have since hampered the joint venture’s development, however, leading to the scrapping of plans for a listing on the Hong Kong Stock Exchange.

Under the deal, Formosa will pay $123 million for a 31 per cent equity stake in the partnership with FMG Iron Bridge, provide a further $576 million for the construction of the initial phase of the project in Western Australia’s Pilbara and, perhaps most crucially, make a pre-payment of $500 million to avail itself of Fortescue’s port and rail assets in the region.

Formosa will also participate in the second stage of the FMG Iron Bridge project, buying 3 million tonnes of iron ore a year from Fortescue at market prices.

The timing of the deal could not have been more propitious for Fortescue, whose $2 billion debt obligation is set to come due around Christmas 2015.

The deal also provides the key boon of generating tremendous profit from Fortescue’s port and rail infrastructure in the Pilbara, which it has previously considered selling in order to alleviate its debt burden, and which has been a main source of dispute arising from other companies demanding railway usage under third-party access laws.

“What I think it does do very clearly is demonstrate the tremendous value that is in the infrastructure we built,” said Fortescue head Nev Boss. “It’s world-class infrastructure, it’s highly efficient and highly productive.”

The deal remains contingent upon the approval of both Australian and Taiwanese regulators.