Guinea Says Rio Bound to $20 Billion Mine as CEO Flags Delay
Guinea Says Rio Bound to $20 Billion Mine as CEO Flags Delay
(Bloomberg) -- Guinea said Rio Tinto Group must honor its commitment to develop the world’s largest untapped iron ore deposit, after the company’s chief executive officer signaled it may delay building the $20 billion mine and related infrastructure because of low prices.
Guinea is counting on Rio and other investors, including Aluminum Corp. of China Ltd. and International Finance Corp., to meet their funding commitments for the Simandou project, the mining ministry said in an e-mailed statement. The government is “convinced” that a financing solution will be found.
Rio, which owns 47 percent of the project, is being squeezed by iron ore prices that have plunged by about 70 percent since 2011 as China’s slowdown left the world awash with supply. Jean-Sebastien Jacques, CEO of the second-biggest mining company, told the Times newspaper this week that he doesn’t see a way forward for Simandou.
“It’s not the right time to develop this project from a Rio standpoint,” the Times cited Jacques as saying. “The other stakeholders might have different perspectives on this one.”
A spokesman for Rio declined to comment beyond Jacques’ remarks in the newspaper. The company submitted a bank feasibility study to the government in May.
Complex Project
Guinea is keen to develop Simandou, which could double the size of the West African nation’s economy and provide an additional 45,000 jobs, the government, Rio, Chinalco and IFC said in 2014. Jacques’ predecessor Sam Walsh said last year that the project, which includes a 650-kilometer (400-mile) railway, is “very complex.”
Separately, Sundance Resources Ltd., based in Perth, Australia, said it’s committed to the 436 million metric ton Mbalam-Nabeba iron ore project on the border between Cameroon and the Republic of Congo, even after prices dropped. “There is no question of abandoning such an important project, especially with the constant support of the highest authorities of Cameroon and Congo,” CEO Giulio Casello said in an e-mailed statement.
--With assistance from Divine Ntaryike Jr. To contact the reporters on this story: Ougna Camara in Conakry at ocamara@bloomberg.net, Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net. To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Tony Barrett