Guinea Blames Rio’s ‘Rambling’ London Team for Mine Delay

(Bloomberg) -- Guinea’s mineral management company said Rio Tinto Group overstated the impact of last year’s Ebola outbreak on developing the world’s biggest iron-ore deposit, Simandou, and delayed its plans for the mine to focus on operations in Australia.

“The real causes of the delay aren’t so much Ebola as they are the ramblings of the technical team in London,” Societe Guineenne du Patrimoine Minier said in its 2015 annual report seen by Bloomberg News this week. “Simfer overstated the effect of Ebola, unlike other mining companies that were able to better manage the epidemic,” it said, referring to the concession license-holding company in which Rio Tinto has a 47 percent stake.

“Rio Tinto stayed in Guinea throughout the epidemic despite many of our contractors withdrawing,” the London-based company said in an e-mailed statement. “We made no job cuts in support of the fragile situation and maintained our spend. We supported the government and frontline agencies including major donations of critical equipment and funds.” It submitted a financing study for the mine to the government in May this year.

Guinea was among three West African countries hardest hit by the worst outbreak of Ebola yet, with more than 11,000 people dying since the first victim was identified in the region in 2013. Abdoulaye Magassouba, the country’s mining minister, said last month he was working to make sure Rio couldn’t “freeze” the project.

Guinea is counting on the project to double the size of its $6.5 billion economy and turn it into the third-biggest exporter of the material. A global glut of iron ore has led to a slump in prices which remain about 70 percent off their 2011 peak. That’s made many undeveloped iron-ore projects uneconomical and led to higher costs and existing mines being shuttered.

Rio Chief Executive Officer Jean-Sebastien Jacques said Aug. 3 “there is no obvious way to take Simandou to the next phase,” and that the company hasn’t been able to find a way to finance it.

The world’s second-biggest iron-ore exporter controls a vast network of mines, ports and railways in the far north of Western Australia where it is able to produce the material far more cheaply for Asian buyers than the cost of constructing a new operation in Africa.

--With assistance from Franz Wild and Jesse Riseborough To contact the reporter on this story: Ougna Camara in Conakry at ocamara@bloomberg.net. To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Ana Monteiro, Jesse Riseborough