Rio Tinto to pay $700 mn to mine in Guinea

Rio Tinto Plc has said it will pay the Guinea government $700 million under a mining settlement in a bid to start iron ore shipments by mid-2015.

The Simandou project in the west African nation would require more than $10 billion of investment, Sam Walsh, chief executive officer of Rio’s iron-ore unit, said in a statement yesterday. The terms of the agreement won’t be affected by the current or future mining reviews by the Guinea government, said the statement.

Rio, the world’s second-largest mining company by sales, has said the project will demand tens of thousands of workers and will create 4,000 full-time jobs when production starts. The settlement between the London-based company and Guinea comes after President Alpha Conde ordered a drafting policy, giving the country at least a one-third stake in mining projects.

 

The agreement “gives us the certainty we need to invest and move forward quickly,” Walsh said in the statement. The Guinea government had the right to as much as 35 per cent of the project, Rio said.

Rio has been involved in a dispute with Guinea since 2008, when the government ordered it to hand over a part of the Simandou venture, a stake later acquired by rival Vale SA of Brazil. Last month, Rio said it had already spent $700 million on the project.

Rio runs the Simandou project through the company’s Simfer SA subsidiary. It has agreed to sell a 44.65 per cent stake in Simfer to Aluminum Corp of China, or Chinalco, as the state-owned company is known.