UPDATE 1-Guinea says mining review to include all producers

Mon Feb 4, 2013 5:51pm EST

CAPE TOWN Feb 4 (Reuters) - Guinea's review of all mining contracts will include an effort to integrate a 2011 settlement struck with global miner Rio Tinto with an original agreement signed with the company, Mines Minister Mohamed Lamine Fofana said on Monday.

Rio Tinto, the world's second-largest iron ore miner, initially controlled all of Guinea's Simandou deposit, one of the largest untapped iron ore deposits in the world.

The West African country's government ousted Rio Tinto from the northern part of the Simandou deposit in 2008. Under a 2011 settlement, the company secured permission to mine the southern half after agreeing to pay $700 million and give the government the right to up to 35 percent.

Fofana emphasised that there would be no revision of the 2011 deal, but said the review would incorporate it with the agreement that first allowed Rio to develop the ore body.

"This accord has to be integrated with the initial framework agreement. To do that, we need to have discussions, and this is what the committee are doing, in order to make the necessary changes to the framework agreement," Fofana told Reuters on the sidelines of an African mining conference.

Fofana said there were "constant discussions" with Rio.

Company officials were not immediately available to comment.

Guinea's government, under President Alpha Conde, has moved to overhaul the country's mining code and has set up a technical committee to review existing natural resources contracts, particularly those signed during the 2008-2010 period, when the country was ruled by a military junta.

Guinean officials said last year that the review would focus on three of the largest contracts, including a deal signed by BSG Resources (BSGR) - part of billionaire Beny Steinmetz's business empire - to obtain the northern half of Simandou.

That project was put on hold last year as BSGR partner Vale cited uncertainties in regulation. Worries over the government's intentions have prompted BSGR to say it would consider all legal options to avoid expropriation.

Fofana, the mines minister, denied BSGR was being targeted.

"I do not understand why BSGR is stigmatised. For us, they are like any other mining project developing in Guinea.

"We do not discriminate, we do not differentiate between BSGR and any other company. The review concerns all companies ... there are no exceptions," Fofana said.

Guinea officials have said they expect to complete the review of the BSGR contract in the first quarter, but Fofana declined to comment on the timing or a potential outcome.

"We need to wait for the outcome of the review. For now, there has only been an exchange of documents," he said, denying there had already been offers to seek alternative investors.

The government is separately in talks to seek financing for its portion of the infrastructure associated with Rio's portion of Simandou. Fofana said there were "fruitful" contacts with financing institutions, but declined to comment further.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.