Rio Tinto set to finalise $20bn Guinea iron ore project

Global mining giant Rio Tinto says it is set to finalise a $US20 billion deal to develop the world's biggest untapped iron-ore deposit in Guinea later this month following years of delays. The Simandou iron ore project, which could create Africa's biggest-ever infrastructure venture, will boost Guinea's annual revenue by $US1.2 billion through income tax and royalty payments and pump billions more into the nation's economy, Rio chief executive Sam Walsh said. "Later this month, we expect to sign the investment framework that formalises our partnership with the government of Guinea, Chalco and the IFC," Walsh said in a speech in Washington on Saturday and uploaded on to the company's website Monday. "This has taken some time to bring to fruition and I think this signing will inject the project with renewed momentum," he added in the speech on infrastructure investment in developing countries, a key theme of this year's G20 meetings chaired by Australia. Walsh said the "remarkable project" would see billions of dollars invested in developing infrastructure in one of Africa's poorest nations, which is still recovering from decades of military dictatorships and misrule. The deal will formalise the partnership for Simandou with Guinea's government, China's state-run aluminium group Chalco and the International Finance Corporation, a division of the World Bank. "When fully operational, the annual economic contribution of Simandou to the Guinean economy is estimated to be $US7.6 billion -- that's 22 times the US$340 million in international aid contributions to Guinea in 2012," Walsh added. "It would be fair to say that this represents a new paradigm for Guinea." The estimated $US20 billion project will include a railway to carry iron ore from the Simandou mountain range to a deep-water port 650 kilometres (400 miles) away. The joint-venture includes the development of the port, the establishment of fibre optic and wireless communications, and more than 1,000 kilometres of new and upgraded roads. Rio was awarded control of all four tenements at Simandou -- which it said held 2.25 billion tonnes of iron ore resources -- in 2006, but was ordered by the then military dictatorship to relinquish two northern concessions in 2008. These concessions were given to BSG Resources (BSGR), a firm controlled by Israeli billionaire Beny Steinmetz, which in turn sold half its rights to Brazilian mining giant Vale. The permits were declared void by the Guinea government last month, although the nation's President Alpha Conde said the withdrawal of concessions were part of a wider clampdown on mining rights and not "case-specific" despite claims of corruption against BSGR. BSGR has strongly denied the allegations. In April, Rio Tinto launched a complaint in a US district court against the awarding of the northern Simandou mining concessions to the VBG consortium, which was formed in 2010 by Vale and BSGR, appealing for damages to be awarded to the miner for the loss of the permits.