Guinea says Rio bound to $20bn mine as CEO flags delay

CONAKRY – Guinea said Rio Tinto Group must honour its commitment to develop the world’s largest untapped iron-ore deposit, after the company’s CEO signalled 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 Corporation of China and International Finance, 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% of the project, is being squeezed by iron-ore prices that have plunged by about 70% 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-km railway, is “very complex.”

Separately, Sundance Resources, 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.