MARKET TALK: Rio-Chinalco Deal More About Relations Than Guinea

29th Jul 2010 03:36

0236 GMT [Dow Jones] While Guinea's 2.2 billion ton Simandou iron ore project clearly major prize for Rio Tinto (RIO.AU) and Chinalco (ACH), today's signing ceremony formalising MoU in Beijing more about direct relationship than attempt to consolidate position on project. Rio Tinto Iron Ore CEO Sam Walsh travelling to Beijing for event this afternoon. Rio and Chinalco signed MoU on Simandou JV in March, Chinalco promising US$1.4 billion investment in return for 45% of project; full infrastructure spending on project could be US$10 billion-US$12 billion. Today's ceremony will aid Rio-China relations after rocky two years saw collapse of Chinalco's planned US$19.5 billion investment in miner, while Rio iron ore exec Stern Hu later imprisoned in China on bribery, secrecy breach charges. Simandou in midst of Guinea's first democratic elections, due for run-off August 14; Rio originally entitled to 95% share in all four blocks at Simandou, though Guinea in 2008 stripped away northern blocks, leased to Israeli diamond dealer Beny Steinmetz, who now in JV with Vale (VALE). Rio never comments on issue; understood to hope to retain entitlement though outcome, dependant on Guinea politics, impossible to read. ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires July 28, 2010 22:36 ET (02:36 GMT)