Iron ore on the move 
London, England — MININGREVIEW.COM — 12 December 2008 – The Rio Tinto Group – the world’s third-largest mining company and second-largest iron-ore producer – has been ordered by the government of Guinea to hand over half of the country’s Simandou deposit to a company controlled by Israeli diamond investor Beny Steinmetz.

Guinea ordered “a compulsory relinquishment of the northern half of the Simandou” concession, while confirming Rio’s right to the southern half, the London-based company said in a statement distributed by the Regulatory News Service here. Steinmetz’s BSG Resources took over the northern section, BSG CEO Marc Struik told Bloomberg News by telephone from Johannesburg.

A company statement released here said Rio Tinto had been in active negotiation in good faith with the government of Guinea since August 2008, following receipt of correspondence from the President of Guinea purporting to rescind the Simandou Mining Concession.

It emphasised that Rio Tinto remained of the view that it had complied with all its obligations in relation to the concession, and that it was entitled to hold and retain the entire concession. “Rio Tinto will continue working in good faith with the government of Guinea to seek to resolve this matter on that basis” the statement said.

Rio, which owns 95% of Simandou, has described the project as “the world’s top undeveloped resource.” In September the company said it was confident it would begin producing 70 million metric tonnes of iron ore a year from Simandou by 2013. So far it has spent about US$400 million (R4.1 billion) on the project.

“If you don’t use it, you lose it, and that is what happened here,” Struik said. “The government wants to see work being progressed, and Rio stated yesterday that they were putting the project on the backburner.”

“BSG has been conducting drilling and exploration since 2006 in sites adjoining the concessions it was awarded yesterday by the government,” he added. Steinmetz controls resources in the Democratic Republic of Congo, Sierra Leone and Macedonia, according to BSG’s Web site.

“We are confident our agreement with the government makes us the rightful holder of the whole of the Simandou mining concession,” a spokesman said today by phone from London.