Aluminum Corp of China (Chinalco), China’s largest aluminum producer, is to set up a joint venture with Anglo-Australian miner Rio Tinto to develop the Simandou iron ore mine in Guinea, the Chinese newspaper ‘China Daily’ reported Saturday.
Chinalco, the top shareholder in Rio with a 9.3 percent stake in the mining group, signed a non-binding accord to pay $1.35 billion for a 44.65 percent stake in the project, ‘China Daily’ added.
Rio will put its current 95 percent holding in Simandou into the new joint venture, Rio said in a separate statement on Friday.
The financing arm of the World Bank holds the remaining 5 percent stake in Simandou, and the Guinean government holds an option to buy up to 20 per cent of the project.
‘China Daily’ quoted Xiong Weiping, president of Chinalco, saying that both sides will accelerate the development of the project, and realize the investment value soon.
Simandou project in Guinea is believed to be the world’s biggest undeveloped iron ore deposit, with 2.25 billion tons of ore. Rio said in it’s website that it has invested $600 million to process and develop the mine, and it is expected to produce 70 million tons of ore in 2013.
“It is a good deal for Chinalco with an estimated annual return of $1 billion for the iron ore project, and it will help to expand the company’s non-aluminum sectors,” Guotai Junan, Securities analysts wrote in a note on Friday.
It is believed that the London-based Rio Tinto has had trouble trying to develop this big mine. It accused the Guinean government of stripping it of the northern section of land the company hoped to mine for iron ore, giving it to another miner, BSG Resources, owned by Israeli billionaire Beny Steinmetz.
Source African Press Agency
African News from NetNewsPublisher.com
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