Guinea gives green light to Rio's Simandou project

26th Apr 2011 07:05

Mining titan Rio Tinto has come to an agreement with the government of Guinea, paving the way for work to begin on the Simandou iron ore project in the southern part of the country.Rio's subsidiary, Simfer, is to pay $700m to the Guinean Public Treasury upon promulgation of Presidential Decrees granting Simfer's mining concession and the approval of the proposed Chalco and Rio Tinto Simandou joint venture. Chalco is a subsidiary of the state-owned Aluminum Corporation of China (Chinalco).The government of Guinea, meanwhile, has the right to take up to 35% stake in the project, including a 15% stake at no cost. The government intends to set up a state mining company to hold its stake."Today's agreement gives us the certainty we need to allow us to invest and move forward quickly so we can bring this great resource into production and deliver its benefits to the Guinean people and Simfer stakeholders. This is a major project and a significant undertaking and we expect a total investment of more than $10 billion to bring the mine and associated infrastructure on stream," said Sam Walsh, chief executive of Rio Tinto Iron Ore.Rio Tinto expects the project will ship its first iron ore by no later than mid-2015 but is targeting first production by the end of 2014. ---jh