Rio Tinto and its partner WCS signed a framework agreement with Guinea’s ruling junta in March this year, to resume the development works, but failed to agree on a joint venture
Rio Tinto and WCS failed to agree on a joint venture. (Credit: Alex Banner from Pixabay)
The government of Guinea has ordered Rio Tinto and its partner Winning Consortium Simandou (WCS) to stop their works at the Simandou iron ore project.
The country’s Mines Minister Moussa Magassouba has issued the order, after the two companies failed to agree on a joint venture, within an extended deadline.
Both Rio Tinto and WCS were not willing to work together, said the Minister in his letter.
Magassouba wrote: “Despite the significant concessions the Guinean State has been kind enough to make, it is clear the obstruction is being maintained by both your companies, to the detriment of the interests of the project.”
The construction of the mine and related infrastructure at the Simandou deposit was previously suspended in March this year.
Rio Tinto and its partner WCS have reached a framework agreement with Guinea’s ruling junta, to jointly resume the development activities.
The works under the agreement include laying a 670km railway from the project site to a new deepwater port. This is expected to cost around $15bn, reported Reuters.
On 19 June, the government had given 14 days for the two companies to agree on a joint venture for the project, extending its previous deadline.
Rio Tinto owns a 45.05% stake in the southern half, which comprises Blocks 3 and 4, of the Simandou deposit, while Chinalco holds a 39.95% stake and Guinea’s government the remaining 15% stake. WCS holds Blocks 1 and 2 of Simandou.
The Simandou iron ore deposit is located in the Simandou mountain range in south-eastern Guinea, believed to be the world’s biggest untapped high-grade iron ore deposit.
It was discovered in 2002, but most of the ore body has remained dormant due to lengthy legal battles involving charges of corruption and bribery for mining rights.
The military dictatorship in the West African country until 2010, along with the huge infrastructure cost to develop the project, have also limited its development.