[miningmx.com] – EFFORTS to build Simandou (Blocks 3 and 4), a proposed 95 million tonne/year iron ore mine in which Rio Tinto is a 50.35% shareholder, received a much-needed shot in the arm after the project’s partners agreed to quickly resolve outstanding issues on the venture.
The project is located in Guinea and has been troubled by delays that will most likely mean proposed first production of iron ore from the project will miss the 2015 target envisaged in a 2011 agreement.
However, in a meeting in London on June 16 between Guinea president Alpha Conde, Sam Walsh, CEO of Rio Tinto, and Jin-Yong Cai, executive vice-president and CEO of the International Finance Corporation (IFC), the partners agreed to continue finalising an investment framework agreement as well as construction of a transportation link.
“The partners have previously established a working group to design the investment framework which will be the basis for seeking financing for the project,” Rio Tinto said in an announcement today.
“The partners lauded the progress made so far by the working group and agreed to resolve outstanding issues as quickly as possible, it said.
The meeting was hosted by George Soros as part of his ongoing support to the Guinea government, Rio Tinto said in its statement. Rio Tinto and the IFC also spoke on behalf of another Simandou shareholder, the Aluminium Corporation of China Limited (Chalco).
It has been speculated that developing Simandou could cost up to $20bn. Once committed, however, the project would help establish Guinea as a major exporter for the west African region.
Part of this capital is for construction of the Trans-Guinean railway of approximately 670km to transport the ore from the mining concession to the Guinean coast as well as a new deep water port south of Conakry in the Forecariah prefecture.
Yet the entire Simandou project has suffered by dint of political and business headwinds.
Rio Tinto was removed as a shareholder in the northern portion of the project (it’s current shareholding relates to the southern portion of Simandou) while the company that replaced Rio Tinto – BSG Resources, a company owned by Israeli entrepreneur and diamantaire, Beny Steinmetz – has been embroiled in claims of bribery.
“The partners affirmed their commitment to the Simandou Project and recognised the Project’s importance to Guinea and to the other partners,” Rio Tinto said.
“They emphasised the importance of transparency and good governance in the development and operation of the project,” it said.
