Rio Tinto says Guinea iron ore partner IFC to sell stake

A man waits to enter the Rio Tinto Limited Shanghai Representative Office in Shanghai March 18, 2010. REUTERS/Stringer

DAKAR (Reuters) - Mining giant Rio Tinto said on Monday that the International Finance Corporation (IFC), a partner in its $20 billion Simandou iron ore project in Guinea, is selling its 4.6 percent stake.

The exit of IFC, an arm of the World Bank, is the latest setback for the project to develop the world’s biggest untapped iron ore reserves. In July, Rio Tinto’s new Chief Executive Jean-Sebastien Jacques indicated the project had been shelved temporarily due to a sustained slump in prices.

“We confirm that the IFC has exercised a put option, which it has held since 2006, to require Rio Tinto and Chinalco to buy their stake in Simfer,” Rio Tinto said in an emailed statement, referring to the joint venture.

Rio has a 46.6 percent stake in the project; China’s Chinalco has 41.3 percent and the Guinea government has 7.5 percent.

A senior official at Guinea’s mines ministry said he was not aware of the decision.

The West African country is counting on the project to spur economic growth after Guinea was hit by a crippling Ebola epidemic that officially ended in June.

When fully operational, Simandou has the potential to double Guinea’s GDP, the project partners have said, while China, the world’s largest iron ore consumer provides an obvious market.

Reporting by Emma Farge; Additional reporting by Saliou Samb in Conakry; Editing by Susan Fenton