Rio Tinto accepts re-issue of Guinea iron mine rights-sources
* Rio sets out stance in letter to government minister
* Letter says civil action over Simandou is claim for damages
* Not seeking reinstatement of Simandou permits
By Silvia Antonioli
LONDON, May 14 (Reuters) - Rio Tinto accepts Guinea's decision to reissue the rights to half a giant iron ore mine that it once held, two sources close to the matter said, clarifying the miner's stance ahead of a new auction for the permits.
Exploiting Simandou, one of the world's most valuable iron ore deposits, could help Guinea to prosper. But development of the deposit in one of Africa's poorest countries has been severely hampered by battles over the mining concessions.
Australian miner Rio last month sued competitor Vale , Israeli billionaire Beny Steinmetz and BSG Resources (BSGR) alleging they had devised a fraudulent scheme to steal its rights to part of Simandou in 2008.
Steinmetz and the mining branch of his business conglomerate, BSGR, has rejected Rio's claim, while Vale has declined to comment.
In a letter sent on Monday to Guinea Minister of Mines Yansane Kerfalla, Rio said the civil action was purely a damages claim and not an attempt to reinstate the mining titles it lost over blocks 1 and 2, the northern half of the deposit, the sources said.
The miner, which is focusing on developing the southern part of Simandou with Chinese partner Chinalco, said it would not challenge anyone who acquired those titles, the sources said.
Rio, the world's second-largest diversified miner by market value, declined to comment.
The West African country plans a new auction to reissue the permits, but the possibility of legal claims from companies that previously held these rights risks curbing interest in the sale.
"The letter was sent because Guinea insisted that Rio clarify their attitude towards the coming tender...reaffirm all their agreements with Guinea, and will work cooperatively with who ever wins the tender, even if it's Vale," a source close to the Guinean government said.
Guinea's President Alpha Conde has said Vale was not involved in the alleged corruption and would be welcome to bid to reclaim permits, previously owned by Rio, that it lost last month.
Guinea stripped BSGR and joint venture partner Vale of their rights, saying it had found BSGR obtained the rights through corruption - a charge BSGR denies.
Rio said it spent hundreds of millions trying to develop Simandou until 2008, when former President Lansana Conte's government revoked its permit on the northern half and transferred it to BSGR, arguing that Rio had moved too slowly.
In the letter, Rio said it was committed to develop the southern part of Simandou in a timely manner.
It also invited any new holder of the titles over the northern part to invest in infrastructure, the sources said. (Editing by Erica Billingham)