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.

August 4th (The Age) – POLITICAL intrigue and rising resources nationalism has raised fresh doubts over Rio Tinto’s grip on its $US6 billion ($A6.46 billion) Simandou iron ore project in Guinea.

Rio has portrayed the proposed development of the huge iron ore deposit as a Pilbara in the making.

And because of its importance as a growth project, it is a key plank in Rio’s defence against BHP Billiton’s $170 billion takeover bid.

But a rattled Rio has revealed that it has received correspondence from Guinean President Lansana Conte purporting to rescind the Simandou mining concession.

Along with its partner in the project, the World Bank’s International Finance Corporation, Rio is studying the issues raised in the correspondence.

Rio said it was “confident that its arrangements are in all respects in conformity with Guinean laws and that it has complied with its obligations”.

It said it had negotiated and executed the mining concession in “full transparency with the Guinean Government”.

Rio’s potential loss of Simandou came as President Conte sacked Secretary-General Mamady Sam Soumah. State TV said Mr Soumah would be replaced by Alpha Ibrahima Keira, the president’s son-in-law.

It was Mr Soumah who first raised tenure concerns for Rio over Simandou in May when he said the Government would be reconsidering the concession because of irregularities in the original agreement. Just as ominous, Guinea’s latest threat to Rio’s Simandou ownership follows the return to Beijing of a Chinese trade delegation offering billions of dollars of investment in Guinea in return for Chinese ownership of resource projects.

There is long-running unease among foreign resource companies in Guinea because of a special committee set up to renegotiate all mining agreements, ostensibly to capture a bigger share of the boom in commodity prices.

Even so, Guinea’s Mines Minister, Ahmed Kante, said early last week that Rio’s Simandou iron ore mine was on track and would benefit Guinea and the company.

The question over Simandou ownership could not come at a worse time for Rio. In May, Rio called on the market to start ascribing some value for the project in valuations of the company — an effort to close the widening gap between the imputed value of BHP’s 3.4-for-1 conditional scrip bid and Rio’s share price.

But shortly after Rio’s call to the market, the first query on Simandou’s mining concession from the Guinean Government surfaced. Somewhat ironically, it was BHP managing director Marius Kloppers who some time later warned about getting too excited too early about projects subject to high levels of sovereign risk. He used BHP’s bauxite-alumina project plans in Guinea as an example.

Rio has spent or committed to spend $US300 million on Simandou.

June 16th (Reuters) – Global miner Rio Tinto Ltd/Plc (RIO.AX: Quote, Profile, Research)(RIO.L: Quote, Profile, Research) is confident its giant iron ore project at Simandou in Guinea can proceed, Chief Executive Tom Albanese said on Monday.

“We are confident. We are continuing to proceed with the project,” he told reporters. Last week Rio said Guinea was reviewing its award of the Simandou mining concession.

 

Earlier, Albanese told a business luncheon that rival BHP Billiton Ltd/Plc’s (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research) $180 billion-plus offer for Rio undervalued its assets and prospects.

 

Rio has rejected the offer of 3.4 BHP shares for each Rio share as too low.

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.

May 29 (Politics.co.uk) – Rio Tinto has further strengthened its position within the iron ore industry with a 2.25 billion tonne addition to its global iron ore resource base.

Significant exploration and resource definition work undertaken over a number of years on the Simandou Mining Concession granted to Rio Tinto in March 2006 has led to the discovery and definition of JORC compliant resources. These resources are located within the Pic de Fon and Oueleba deposits which form part of the Simandou range in south eastern Guinea.

The chief executive of Rio Tinto Iron Ore, Sam Walsh, said: “Simandou in Guinea represents a major new iron ore province. Its strategic location gives us access to the Atlantic basin and the fast growing Middle Eastern market. We are planning the development of our first production phase of 70 million tonnes per annum, potentially rising to 170 million tonnes per annum, subject to agreement with the government of Guinea. We believe this area represents one of the best undeveloped major deposits of premium-grade iron ore in the world.”

Location of the deposits
The Pic de Fon and Oueleba deposits are located ~550km east-south-east of Guinea’s capital Conakry towards the southern end of the 110km long Simandou range in SE Guinea (see Figure 1 below) within Rio Tinto’s Simandou Mining Concession.

Geology of Pic de Fon and Oueleba
The Simandou range consists of a sequence of deformed itabirites, phyllites and quartzites within Proterozoic basement rocks. At Pic de Fon and Oueleba, the itabirites have been enriched to form hematite and hematite-goethite mineralisation.

Both the Pic de Fon and Oueleba deposits are approximately 7.5 km in length and up to 1km wide. The two deposits are separated by approximately 4 km in a north south direction along the Simandou range.

Rio Tinto has drilled over 500 reverse circulation and diamond drill holes (approximately 93,000m) at Pic de Fon and Oueleba. Very high-grade iron ore mineralisation has been intersected to over 300m depth at both deposits.

Mineral Resources
The resources at Pic de Fon and Oueleba have been generated in compliance with JORC Code guidelines. All resources quoted below are within the Simandou Mining Concession (March 2006) in which Rio Tinto holds a 95 per cent interest with the remaining 5 per cent held by the International Finance Corporation, the investment branch of the World Bank Group The government of Guinea retains an option to purchase up to a 20 per cent interest in the Simandou project.

The tabulated resources are split into the two deposits and are considered extractable using currently available standard mining and processing technologies. All resources are reported on an in-situ dry tonnes and grades basis.

Pic de Fon Mineral Resources (for Fe >62%):

 
Resource Category Tonnes (Mt) Fe %
Indicated 320 67.2
Inferred 252 66.2
Total 572 66.8

Oueleba Mineral Resources (for Fe >62%):

 
Resource Category Tonnes (Mt) Fe %
Indicated 980 65.6
Inferred 703 65.8
Total 1,682 65.7

Approximately 30 per cent of the Inferred resources reported above are extrapolated outside of the current drilling coverage. The mineralisation envelope has defined and constrained using drilling data, detailed surface mapping and ground magnetics in accordance with an appropriate genetic model for this style of deposit.

Future Direction
Rio Tinto’s evaluation work is continuing at both deposits as part of a Pre-Feasibility study to further improve the confidence in the known resources and for definition of additional resources. The pre-feasibility study is also evaluating rail and port infrastructure and completing environmental and social studies.

In addition, Rio Tinto is aggressively exploring the remaining parts of the 738km2 Simandou Mining Concession for further resources as part of an agreed programme with the Government of Guinea.