Fortescue Metals Group will enter a joint venture with Vale and has laid the groundwork for the Brazilian iron ore giant to buy a stake of up to 15 per cent in Fortescue or equity in its mining assets, after striking a non-binding memorandum of understanding.

Shares in the miner surged 23.7 per cent in Monday trade to close at $3.08. That is the first time the shares have gone $3.00 since November 2014. The announcement comes as iron ore prices surged more than 18 per cent overnight.