Rio Tinto Faces Review of $6 Billion Guinea Iron Ore Project
June 11, 2008
June 11th (Bloomberg) – Rio Tinto Group, the world’s third- largest mining company, is facing a review of an agreement covering a $6 billion iron ore project in Guinea.
The Secretary General of the President’s Office in Guinea sent a letter questioning the decree covering Rio Tinto’s mining concession at Simandou, the London-based company said today in a statement to the Australian Stock Exchange. Rio Tinto said it’s in talks with the government about the letter.
Guinea follows Zambia and the Democratic Republic of Congo in reviewing agreements to mine Africa’s natural resources because of the seven-year boom in prices that has created record earnings for the industry. The price of iron ore, a key ingredient in steelmaking, has risen for six straight years on demand led by China.
Rio is confident its agreements are “in all respects, in conformity with Guinean laws in their current form,” the company said in the statement. It has complied with all its obligations, it said.
Rio fell by as much as A$3.65, or 2.7 percent, to A$129.90 and traded at A$131.50 at 1:20 p.m. Sydney time on the exchange.
Simandou has resources of 2.25 billion metric tons of iron ore. It may produce about 70 million tons of iron ore a year, potentially rising to 170 million tons, Rio said in May.
Guinea may seek a bigger share of profits from foreign mining companies, a government representative said on April 24.