Tue, May 20, 2014 - Page 15 News List

Rio Tinto ready to finalize US$20bn Guinea iron project

AFP, SYDNEY

Global mining giant Rio Tinto Group says it is set to finalize a US$20 billion deal to develop the world’s biggest untapped iron ore deposit in Guinea later this month following years of delays.

If completed, Rio chief executive Sam Walsh said the Simandou iron ore project, which could create Africa’s biggest-ever infrastructure venture, would boost Guinea’s annual revenue by US$1.2 billion through income tax and royalty payments, and pump billions more into the nation’s economy.

“Later this month, we expect to sign the investment framework that formalizes our partnership with the government of Guinea, Chalco and the IFC [International Finance Corp],” Walsh said in a speech in Washington on Saturday, which was uploaded to the company’s Web site yesterday.

The deal is to formalize the partnership for Simandou with Guinea’s government, China’s state-run Aluminum Corp of China (Chalco, 中國鋁業) and the International Finance Corp, a division of the World Bank.

“This has taken some time to bring to fruition and I think this signing will inject the project with renewed momentum,” he added in the speech on infrastructure investment in developing countries, a key theme of this year’s G20 meetings chaired by Australia.

Walsh said the “remarkable project” would see billions of dollars invested in developing infrastructure in one of Africa’s poorest nations, which is still recovering from decades of military dictatorships and misrule.

“When fully operational, the annual economic contribution of Simandou to the Guinean economy is estimated to be US$7.6 billion — that’s 22 times the US$340 million in international aid contributions to Guinea in 2012,” Walsh added. “It would be fair to say that this represents a new paradigm for Guinea.”

The estimated US$20 billion project is to include a railway to carry iron ore from the Simandou mountain range to a deepwater port 650km away.

The joint venture is to include the development of the port, the establishment of fiber optic and wireless communications, and more than 1,000km of new and upgraded roads.

Rio was awarded control of all four tenements at Simandou — which it said held 2.25 billion tonnes of iron ore resources — in 2006, but was ordered by the then-military dictatorship to relinquish two northern concessions in 2008.

These concessions were given to BSG Resources (BSGR), a firm controlled by Israeli billionaire Beny Steinmetz, which in turn sold half its rights to Brazilian mining giant Vale SA.

The permits were declared void by the Guinea government last month, although Guinean President Alpha Conde said the withdrawal of concessions was part of a wider clampdown on mining rights and not “case-specific,” despite claims of corruption against BSGR.

BSGR has strongly denied the corruption allegations.

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