Conakry, Guinea — MININGREVIEW.COM — 23 February 2011 – Vale SA “’ the world’s second-largest mining company by market value “’ is to spend more than US$1 billion to rebuild a 662km rail line in Guinea, where it plans to start producing iron ore next year.
“The railroad, running between the capital Conakry and Kankan, may be in operation by 2013 or 2014,” Vale CEO Roger Agnelli said here, after Ricardo Saad, project manager for Vale’s Guinean Simandou mine, had disclosed the investment. The rail line has been out of operation since 1983.
“We shall be capable of building the railroad as soon as possible so that we can mark our presence in Guinea,” Agnelli told reporters here as the first track was laid. The event was also attended by President Alpha Conde of Guinea and former Brazilian President Luiz Inacio Lula da Silva.
Mining companies including Vale and Rio Tinto Group have been lured by Guinea’s mineral riches. The West African country holds as much as half of the world’s bauxite, used to make aluminum; more than 4 billion metric tonnes of high-grade iron ore; and significant deposits of diamonds and gold, according to the U.S. State Department.
Vale, based in Rio de Janeiro, last year agreed to pay US$2.5 billion for Guinean iron-ore deposits. The sites include Simandou North Blocks 1 and 2 “’ assets that were confiscated from Rio Tinto over a development dispute “’ and the Zogota project in Simandou South.
Conde said he sought a “win-win” cooperation with Brazil, after saying last month that the government planned to own at least a third of new mining projects. “We are actually doing a new mining code so that Guinea is the owner of the mines,” Conde said.
Vale, which targets investment of US$861 million in the Simandou area during 2011, said in a statement that it would start production from Zogota in 2012 and ramp up to capacity of 15Mtpa. The development of Blocks 1 and 2 would boost annual capacity to 50Mt by 2020, the company added.