* First export from Simandou south expected in Dec. 2018
* Final decision on project will be after feasibility study
By Silvia Antonioli and Alexandra Reza
LONDON, Aug 7 Rio Tinto
indicated it would not take part in a tender for the mining
rights for the northern half of the disputed Guinea iron ore
deposit Simandou, saying the government would prefer other
companies to invest.
The global miner already owns a stake in the southern part
of the project, the biggest and highest quality untapped iron
ore deposit known.
Mining concessions for the northern half are now up for
grabs after the government took them from the previous holders:
Brazilian miner Vale and BSG Resources (BSGR), the
mining branch of Israeli billionaire Beny Steinmetz's group.
Potential investors may be deterred, however, by falling
iron ore prices and by a threat from BSGR that it will sue any
investor in its former license.
Iron ore .IO62-CNI=SI has lost half of its value since
hitting a peak of almost $200 a tonne in 2011.
"I don't think that the government actually wants us to
participate," Rio Tinto Chief Executive Sam Walsh said during a
"I think the government is looking to have a bit of
diversity in terms of who would build that project. And that's
fine, we understand that."
Rio Tinto said exports are likely to start from the southern
part of Simandou by December 2018.
Risks of a delay in the $20 billion project are high,
however, given that Rio Tinto and the Guinea government still
have to find partners to build and finance infrastructure to
move the ore out of its location, a remote mountain in the
north-east of Guinea.
Rio signed an investment framework with Guinea in May
setting out conditions for the massive infrastructure investment
needed for Simandou. But it said it would take a decision on
whether to go ahead only after it receives a in-depth
feasibility study due next year.
"The (start) date will be determined by the bankable
feasibility study," Walsh said.
"Some people have thought, when we announced the signing of
the framework, that we were committing to the project. It's a
commitment to the framework. That (commitment to the project)
will need to be studied during the bankable feasibility study.
And it's at that point when it's completed that we would make an
When fully ramped up, southern Simandou could produce about
100 million tonnes a year, or just below 10 percent of the
global seaborne iron ore market.
Rio also held the rights to develop the northern part of
Simandou until 2008, when former President Lansana Conte's
government revoked that permit and transferred it to BSGR,
arguing that Rio had moved too slowly.
In April, Rio filed a lawsuit against BSGR and Vale, its
former partner in the project, alleging they had devised a
fraudulent scheme to steal those rights.
Other parties interested in the northern Simandou licenses
are steelmaker ArcelorMittal, Vale, BHP Billiton
and the Chinese government, by far the largest
consumer of the steel raw material, sources said.
Miner and commodity trader Glencore has also been
courting Guinea over its iron ore riches, a document obtained by
(editing by Jane Baird)