BHP picks B&A as preferred bidder for Guinea iron ore stake

LONDON Wed Dec 19, 2012 11:56am EST

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LONDON (Reuters) - BHP Billiton (BHP.AX) has selected mining venture B&A Mineração as the preferred bidder for its stake in Mount Nimba, one of the largest iron ore deposits in Guinea, a source familiar with the situation said.

B&A Mineração was founded by Roger Agnelli, the former chief executive of Brazil's Vale (VALE5.SA), together with investment bank BTG Pactual BTG.UL, which is controlled by billionaire financier André Esteves.

The venture is hammering out conditions for exclusive talks, the source said.

"BHP will enter exclusive negotiations with B&A to sell its slice in Mount Nimba and its smaller iron ore assets in Liberia," the source said.

BHP and B&A Mineração declined to comment.

B&A, a relative newcomer with bold ambitions in the sector, beat rivals including ArcelorMittal (ISPA.AS), the world's largest steelmaker, which is strapped for cash but owns a large project of its own just over the border.

Market sources valued the potential deal at around $500 million to $600 million.

BHP, the world's largest miner, currently owns a stake of just over 40 percent in the venture behind the Mount Nimba deposit. Gold miner Newmont (NEM.N) owns another 40 percent.

A third party, French power plant builder Areva (AREVA.PA), is currently being bought out of the venture by BHP and Newmont, leaving both with a 50 percent slice, a source familiar with the matter said last month.

BHP decided earlier this year to pull out of its Mount Nimba iron ore project and also cast doubt on the prospects of dozens of West African iron ore projects.

Mount Nimba is not the first time Agnelli has targeted Guinea.

Two years ago, when Agnelli was at the helm of Vale, the world's largest iron ore miner pushed into the West African country, taking a stake in assets including blocks of the giant Simandou deposit, which had been confiscated by the government from rival Rio Tinto (RIO.AX).

The decision of the world's top miners to invest in resource-rich Guinea and West Africa in recent years fuelled local governments' hopes that a mining boom would benefit the region.

Development has often been slow, however.

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

(Editing by Veronica Brown and Jane Baird)

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