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Rio Tinto Limited intends to withdraw from participation in the Simandou project and sold his part of shares.

2 November 2016

Simandou project is an iron ore and is situated in Guinea, Africa. According to experts in Simandou is the largest to date ore reserves. According to preliminary estimates they reach 2 billion tonnes of ore, approximate their cost amounts to $ 50 billion. So why is Rio Tinto Limited sell such a valuable project?

The fact that Rio Tinto is not the sole owner, the company concentrated 46.6% of the shares, or 41.3% of the shares owned by Chinalco and 7.5% is controlled by the Guinean government, which took away some of the rights Rio for ownership of the mines. The government of Guinea has put forward the conditions for the transportation of iron ore using its own ports, rather than the more cost-effective method of delivery through the ports of Liberia. But due to the remoteness Simandou, the question arose about the need to build 130 km of roads and over 600 km of railroads, which will cost $ 20 billion. to meet the requirements of the Guinean government.

Rio Tinto is difficult to find the money to Finance the Simandou, it spoke Director General Jean-Jacques Sebastien. Despite the current state of prices per ton of ore, which is 64 USD. and continues to grow. Although analysts have projected the price to fall to the level of 40−50 dollars. per ton. And with the growth of commodity prices the financial issue of the project, given the observance of all norms and requirements is too costly for companies and the development of the project may be delayed indefinitely, which is at odds with the plans of the Guinean government about this project.

And, Rio Tinto does not want to be drawn into further legal dismantling associated with the repeated sale of shares owned by the Guinean government.

According to this, an Australian mining Corporation Rio Tinto Limited decided to sell its stake in Chinalco, making her the winner of the absolute majority of the share in Simandou. From this transaction, Rio expects to 1.1 to $ 1.3 billion. and get rid of unnecessary legal red tape.

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