Rio Tinto, Guinea Sign Deal On $20 Bln Simandou Mine

(RTTNews) - Anglo-Australian mining giant Rio Tinto Plc (RTNTF, RIO, RIO.L, RTPPF) Monday announced that the company and its partners Aluminum Corp of China, or Chinalco, and the International Finance Corp, the private-sector arm of the World Bank, have signed the Investment Framework or IF with the Government of Guinea for blocks 3 and 4 of the Simandou project.

The Project, which is deemed to be Africa's biggest mining project, is an iron ore mining development located in the south-east of Guinea, and is estimated to cost $20 billion to build.

The project comprises a high-grade iron ore mine of 100 million tons per year at full production, a new 650km trans-Guinean multi-user railway to transport iron ore to the Guinean coast, and a new deep-water multi-user port in the Forécariah prefecture.

Rio Tinto and its partners reportedly have been in talks with Guinea President Alpha Condé's government for months to find a way for the Simandou mine to be financed and executed.

The company noted that the signing of the IF now provides the legal and commercial foundation for the project, which will be the largest combined iron ore and infrastructure project ever developed in Africa.

The Government of Guinea will now submit the IF for the consideration of the Guinean National Assembly within the coming days, in order to seek its ratification. Following this, the project partners will finalize the Bankable Feasibility Study within approximately one year from ratification. This study will confirm all the project parameters including cost and timeline.

Rio Tinto added that the partners are trying to find a consortium of investors to finance, build and own the multi-user 650km railway and deep-water port infrastructure within the agreed timeframe.

Republic of Guinea has a 7.5 percent stake in Simfer S.A., the owner of the Simandou mine. Rio Tinto holds 46.57 percent stake in the project, Chinalco holds 41.3 percent stake and the International Finance Corp. or IFC holds 4.625 percent stake.

State Minister of Mines and Geology of the Republic of Guinea Kerfalla Yansané said, "This estimated $US20 billion project, aiming to develop blocks 3 and 4 of Simandou along with the infrastructure, will boost Guinea's whole economy and spur our Southern Growth Corridor through mining, agriculture, forestry, livestock and trade. It's about unlocking our huge potential, supporting our efforts to tackle poverty through jobs creation and economic diversification, and getting more attractive to foreign direct investment."

In London, Rio Tinto shares are currently trading at 3,239 pence, down 18.50 pence or 0.57 percent.