Rio Tinto vows to fight for Simandou iron ore rights
August 7, 2008
August 7th (Steel Guru) – Rio Tinto said that it would fight for its right to continue developing a world class iron ore project in Guinea, after the country’s president appeared to rescind the concession.
Mr Sam Walsh head of Rio’s iron ore division said that “This is a matter that is under very heavy discussion between us and our joint venture partners, the World Bank. We are in the midst of discussions. We will fight for our rights.”
Mr Walsh denied reports the Guinean government had accused Rio of developing a monopoly on all iron ore resources of the Simandou region, saying this was simply not true. He said Rio’s project comprised only 18% of the deposits of the Simandou range.
Rio has already spent USD 300 million developing the Simandou iron ore project, which is without doubt, the top undeveloped tier one iron ore asset in the world. Rio had planned to start mining at Simandou by 2013, but in June 2008 received a letter from the president’s office questioning the validity of its Simandou concession. Rio remains on site and said it was confident that its arrangements are in all respects in conformity with Guinean laws and that it has complied with its obligations.
Simandou is a prominent component of the list of growth projects Rio is using in its defense against a hostile USD 170 billion takeover bid from BHP Billiton. Building the mine and the railway needed to transport the iron ore to Guinea’s coast is expected to cost USD 6 billion. The project could eventually produce up to 170 million tonnes of iron ore a year.