Rio Tinto has talked up the economic benefits to Guinea of its Simandou iron ore project in its presentation to Indaba Mining, after senior Guinean officials confirmed a review of its granted mining contracts would include the project.
Guinean Mines Minister Mohamed Lamine Fofana said on Monday a broad review of mining contracts, focused on those signed between 2008 to 2010, when the country was being run by a military junta, would also include a review of a 2011 deal with Rio that saw the company pay $US700 million and offer the Guinean government the option over 35 per cent participation in the mine. The review is understood to be focused on the deal by which Vale acquired the northern half of Simandou, stripped from Rio in 2008.
While Mr Fofana emphasised there would be no revision to Rio's 2011 deal, it needed to be "integrated" with an earlier agreement first allowing Rio to develop the mine.
Speaking yesterday in Cape Town, after Mr Fofana's comments, Rio chief executive of diamonds and minerals Alan Davies devoted a lengthy portion of his presentation to the economic benefits to Guinea of the mine, saying the planned 720km rail line from the project - which would be made available for passenger and other freight use - could deliver as much as $US3 billion ($2.88 billion) a year in economic benefits to Guinea.But Mr Davies flagged potential issues with the rail corridor, saying the need to relocate and compensate villagers living in its path would be one of Rio's "key challenges". He also said Rio was committed to its coal operations in Mozambique, despite the $US3 billion writedown announced last month.