Guinea losing patience with Rio Tinto

Guinea is stuck in a painful marriage with Rio Tinto Group. Business Day reports that the West African nation is unhappy that Rio is taking so long to develop Simandou, the world’s largest untapped iron-ore deposit. But with a $20bn bill and prices near a seven-year low making major companies rein in spending, it is difficult for Rio to make a move. The report says the stakes for Guinea are huge.

Simandou could double the size of its $6.5bn economy and turn it into the third-biggest iron-ore exporter, according to Rio’s own analysis. Eighteen years after the government invited the producer to explore the deposit, Rio says state reviews, low prices, losing the rights to half its deposit and the worst outbreak of Ebola, which CEO Sam Walsh called a ‘force majeure event’, have set it back. It was a ‘very complex’ project, Walsh told the US Chamber of Commerce last month. Rio and its partners had already spent $3bn on the deposit, he said. Not advancing Simandou fits in with tactics by Rio, Vale andBHP Billiton to acquire the largest deposits, but then not develop them so that they do not compete with existing mines, according to Kenneth Hoffman, a senior metals and mining analyst with Bloomberg Intelligence.

Climate Change

Source: Business Day

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About the Author

About the Author: Eugene Obiero is the founder of The Africa Resources Post and its predecessor The East African Energy Blog. Eugene has been writing and blogging on energy and extractives in Africa since June 2012. He is based in Nairobi, Kenya and works for Camco Clean Energy (http://www.camcocleanenergy.com/ ) as Senior Manager Africa Projects. He specializes in market entry strategy, research, financial advisory and project management. Eugene has an MBA from The Warwick Business School, University of Warwick (UK). The posts on this blogsite are Eugene's and do not necessary reflect the thinking of his employer, Camco Clean Energy. .

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