Guinea wager


Rio Tinto has not been immune to project setbacks.

A US$1.1B write-down on its vast Simandou iron ore development pushed the mining giant into a net US$866M loss last year, and forced the cancellation of its annual dividend payments. In 2014, Rio, along with project partners China’s Chalco and the World Bank, inked an agreement with the Guinea government to make a US$20B investment in the southern Simandou deposit. The Guinea project included a new 650 km railway to Conakry, the capital in the north, and a new US$7B deepwater port.
But, with stakes this high,  Rio has not withdrawn from the Guinea development. Rio’s Simandou project president, Alan Davies, told Reuters in February that the write-down was “just an accounting adjustment” and would not impedethe timing or the “hunt for funding”. The Ebola outbreak held up initial work on the 2 Bt reserve, but a feasibility study was released at the end of last year. The Simandou concession at full production would export up to 100 Mtpa, and make Rio the largest iron ore miner.
Rio has held the rights for Simandou for 15 years, and has already spent more than US$3B on development of the high-grade deposits. The mine and handling infrastructure are to be built by Chinese construction firms, but the price of iron has taken the urgency out of the development, to the frustration of the Guinea government. Glencore is yet to pursue further talks held in Conakry in 2014 around the development of the northern deposit. Rio held the licence for the entire deposit from the early 1990s until 2008, when it lost the concession.

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