Guinea halts Simandou iron ore project, seeks new partners

Guinea’s military government previously suspended construction of the mine and related infrastructure in March.

Mist shrouds the Simandou mountains in Beyla, Guinea
Mist shrouds the Simandou mountains in Beyla, Guinea, an area that is home to some of the planet's finest iron ore, a treasure long coveted by the world's mining giants on June 4, 2014 [File: Saliou Samb/Reuters]

Guinea’s mines minister has ordered all work related to the Simandou iron ore mine project to be halted after the two companies involved missed an extended deadline to agree on a joint venture.

In a July 3 letter seen by the Reuters news agency on Monday and addressed to Rio Tinto’s Guinea subsidiary Simfer SA and Chinese-backed consortium Winning Consortium Simandou (WCS), Mines Minister Moussa Magassouba said they have shown a “lack of willingness” to work on a partnership.

“Despite the significant concessions the Guinean State has been kind enough to make, it is clear the obstruction is being maintained by both your companies, to the detriment of the interests of the project,” Magassouba wrote.

Magassouba said the halt would apply across the country, effective from 8am local time (08:00 GMT) on Monday.

Rio Tinto declined to comment on the latest stoppage and WCS did not immediately reply to a request for comment.

In a later statement, the government said it was open to discussions with new partners in the ambitious project that aims to extract iron ore from its remote hinterland to a port hundreds of kilometres away but which has been dogged by delays in recent years.

Guinea’s military government has suspended construction of the mine and related infrastructure once before, in March. That resulted in Rio and WCS signing a framework agreement that month under which they would “co-develop” infrastructure for the mine, including a 670-km (416 miles) railway and a port.

The government gave the companies 14 days on June 19 to agree on a joint venture, itself an extension of a previous deadline.

The March framework agreement guaranteed the state 15 percent of the Simandou iron ore as well as a free and non-dilutable 15 percent stake in the railway and port joint venture, the government has said.

Magassouba said Rio and WCS were stalling over the terms of the government’s stake in the joint venture, blaming the companies for “inertia” on this issue.

Source: Reuters