JOHANNESBURG (miningweekly.com) – Diversified major Rio Tinto has signed a nonbinding agreement to sell its stake in the massive Simandou iron-ore project, in Guinea, to Chinese company Chinalco.
Under the terms of the deal, Rio Tinto will receive payment of $1.1-billion to $1.3-billion, based on the timing of the development of the project, which has an ore reserve of over two-billion tonnes and a mine life in excess of 40 years.
Development of the $20-billion Simandou project, which includes a 650 km railway and a deepwater port, was shelved by Rio in July, owing to the global iron-ore oversupply and challenges in securing financing for the project.
The International Finance Corporation, earlier this month, also announced that it would sell its 4.6% stake in the project.
The mine not only has the potential to double the size of the West African country’s economy, but could possibly make Guinea one of the world’s top iron-ore exporters.
Both rail and port would be available for use by third parties, on prescribed terms.
The proposed openpit mine has an expected capacity of 100-million metric tonnes of iron-ore a year.