Guinea to sell rights to seized iron ore deposit
GUINEA plans to sell rights to mine the world’s biggest iron ore deposit seized from billionaire Beny Steinmetz’s BSG Resources and Vale.
Permits for about half of Simandou, a mountain range in the West African nation, should fetch not less than $100 million (R1.1 bn), President Alpha Conde said. Guinea’s mining minister is in Paris preparing the tender with lawyers, Conde said, without providing a timeline.
“Simandou is not a small mine,” Conde said on Wednesday in Conakry, the capital. “Therefore, we have to make a correct call for tenders.”
The offer has attracted interest from ArcelorMittal, the world’s biggest steelmaker, and Glencore, people familiar with the matter said in July. BSG Resources and Vale had planned a $10bn project at Simandou until the government revoked their permits, citing evidence of corruption in the selection process.
BSGR is seeking to block the tender and has filed an arbitration request with the International Centre for Settlement of Investment Disputes against Guinea. The rights were confiscated illegally “through a deeply flawed process based on unreliable and untested evidence”, it said on September 10.
Guinea is one of the three countries most affected by the Ebola outbreak in West Africa, which has resulted in more than 15 000 infections and 5 600 deaths, according to the World Health Organisation.
Rio Tinto Group, the world’s second-biggest mining company, owns the rights for the other half of Simandou, which has more than 2 billion tons of high-grade resources and a mine life of 40 years. Rio said in May it had agreed to financial terms with the government for a $20bn mine, port and rail project that would start by the end of this decade.
Tumbling prices for iron ore, down 49 percent this year to $68.49 a ton, have pushed higher-cost producers out of the market. Vale, Rio and BHP Billiton, the world’s biggest miner, have maintained expansion plans, betting on a recovery.
Rio has estimated Simandou could produce 100m tons of the key steelmaking ingredient a year. The project could double the West African nation’s current gross domestic product and add 45 000 jobs.
Rio’s project partners are Aluminum Corporation of China, International Finance Corporation and the government of Guinea. – Bloomberg