Conakry, Guinea — MININGREVIEW.COM — 02 August 2010 – A deal between Rio Tinto and Aluminum Corporation of China Limited could speed up development of Guinea’s Simandou iron ore deposits, but the government of the West African state has not yet approved it.
Aluminum Corporation of China, known as Chalco, signed a US$1.35 billion (R10.1 billion) deal for the project “’ which Rio claims is the world’s largest undeveloped deposit of iron ore “’ with Australian-based Rio last week,
Reuters reports that it is one of a flurry of mining deals in Guinea signed in recent months, and comes amid elections that, if smooth, could end a political crisis there since a 2008 coup put the country in the hands of a military junta.
Guinea is already the world’s top supplier of aluminium ore bauxite, but is eager to diversify.
“Anything that will advance the development of Simandou is good for Guinea and this accord, if finalised, has the potential to do that,” said mines minister Mahmoud Thiam here in an interview with Reuters.
The Simandou venture is expected to begin production within five years, Rio said last week.
The Chinese group would have 47% of the venture’s interest, with Rio holding the remaining 53 %. The joint venture will hold a combined 95% of the project, with International Finance Corporation owning the rest.
However, the Guinea government has said that it plans to exercise an option to own 20% of the Simandou project, which would reduce the joint venture and IFC’s stakes proportionally.
Rio reckons the Simandou deposit holds 2.25 billion tonnes of ore. The project is forecast to cost US$6 billion (R45 million).