Vale's former boss Agnelli eyes Guinea potential again

LONDON Wed Nov 7, 2012 6:55am EST

LONDON Nov 7 (Reuters) - A mining venture co-founded by the former boss of Vale, Roger Agnelli, is among suitors eyeing BHP Billiton's slice of the Mount Nimba iron ore deposit in Guinea, sources familiar with the matter said.

Other suitors for BHP's share of the joint venture that holds the Nimba mining concession include the world's largest steelmaker ArcelorMittal, which has a mine just over the border in Liberia, the sources said.

A dealmaker by background, Agnelli is staging a return to West Africa with billionaire banker Andre Esteves. Two years ago, Agnelli led Brazilian miner Vale's push into Guinea, controversially taking a stake in iron ore assets that included blocks of the Simandou deposit confiscated by the government from rival Rio Tinto.

Agnelli, 53, was ousted from Vale last year after a decade at the helm. Analysts said his plans for a multinational Vale, did not chime with the Brazilian government's own, more nationalistic view.

He is returning to mining and Guinea through B&A Mineracao, a partnership between his venture AGN Participacoes and Esteves' investment bank BTG Pactual Group, just after Vale's new bosses shelved their major commitment in the country.

They said the Simandou project was too costly at a time of cooling demand and also complained about opaque regulation.

One of the sources said Jonah Capital, a private investment company which is a partner of Anglo American subsidiary Kumba Iron Ore in Liberia, was also among the suitors.

"The sale (of Nimba) is in a second phase now. B&A, ArcelorMittal and other suitors have visited the site in Guinea and Liberia and have made non-biding bids," one source with knowledge of the situation said. "Later this month the companies should come out with binding offers."

BHP currently owns a stake of just over 40 percent in the venture behind the promising Mount Nimba deposit, along with gold miner Newmont. A third party, French power plant builder Areva, is being bought out of the venture, which will leave BHP and Newmont with a 50 percent slice each, one of the sources said.

BHP indicated earlier this year it was pulling out of Guinea, as projects there and in neighbouring Liberia fell victim to the global miner's focus on ma jor a s sets. It has since said Australia and Brazil will alone be able to satisfy global demand for iron ore - without recourse to new producing regions like West Africa.

Investment bank Nomura is managing the sale, which is expected to include other BHP concessions in Guinea and BHP's projects in Liberia. One source put the potential value of the sale at up to $500 to $600 million.

Nimba, an early-stage project , is a promising deposit but, like most in Guinea and the broader region, it will need to overcome a chronic lack of infrastructure. It also faces environmental scrutiny, given its proximity to a World Heritage site.

"The logical buyer is ArcelorMittal. This is theirs to lose," said another source close to the situation, pointing to existing rail and other infrastructure the steel giant already owns just over the border from BHP's Nimba.

"Agnelli has money to spend... but for a financial investor, this is not the easiest asset to start with."

Arcelor is heavily in debt but has infrastructure and a mine producing steelmaking ingredient iron ore just across the border.

BHP and ArcelorMittal held talks two years ago on combining their Guinea and Liberia assets though negotiations failed.

BHP has said it is reviewing its projects in the region, but declined to comment. ArcelorMittal, Areva and B&A Mineracao also declined to comment. Newmont and Jonah Capital were not immediately available for comment.

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