Vale Buys Majority Stake In Guinea Mining Project

Brazilian miner takes 51 per cent in BSG Guinea JV

Brazilian miner Vale has bought a majority stake in a division of mining company BSG Resources in Guinea, at a cost of $US2.5 billion.

The stake will give Vale access to what it referred to as being among the best deposits of iron ore in the world.

"Guinea will be a player on the world iron market within four years and could be the number three producer in six years," Mines Minister Mahmoud Thiam said. "This decision will also kick-start other mining projects in Guinea."
Production at the Simandou South property known as Zogota will begin in 2012 with 10 million tonnes of iron ore rising to 50 million tonnes by 2015, Vale said. The deal also gives Vale access to exploration blocks Simandou North 1 and 2.

It will pay $US500 million up front for a 51 per cent stake in BSG Resources (Guinea) Ltd and the remaining $US2 billion in subsequent payments.

The joint venture has committed to renovate 660 kilometres of railway on which Vale plans to export the iron ore via Liberia.

BSG Resources is controlled by Israeli billionaire diamond trader Beny Steinmetz and
has oil and gas projects in Russia and Nigeria, and copper, diamonds and iron ore mines in Africa, and an engineering arm,.

Vale is also in talks with Liberia about a possible concession there and may seek a stake in the Belinga iron ore project in Gabon which was offered to a Chinese company. It is expected that Vale will form a joint venture for Belinga.

Chinalco: Simandou Due Diligence Ongoing

Chinalco President Xiong Weiping has said his company is in the midst of conducting due diligence on its $1.35 billion deal with Rio Tinto PLC to develop the Simandou iron ore mine in Guinea.

Speaking in his capacity as chairman of Aluminum Corp. of China Ltd, Chinalco's listed unit known as Chalco, Xiong said Chinalco will decide on starting the feasibility study on the project once due diligence is completed.

On 21 March Chinalco and Rio Tinto agreed on a non-binding memorandum of understanding to set up a joint venture to develop the west African property, the first major step between the two companies to repair relations after Chinalco's plan to invest $19.5 billion in Rio Tinto collapsed last June.

Rio Tinto, Chinalco Agree To Develop Guinea Iron Ore Project

Rio Tinto and Chinalco have agreed to develop the Simandou iron ore mine in Guinea.

Chinalco will pay $1.3bn for 47% of the project.

The deal comes amid tensions between China and Australia over next week's trial of four Rio employees on bribery and commercial spying charges.

China has rejected requests for the trial to be fully open to diplomats, citing concerns over trading secrets.

Chinalco Confirms Guinea, Mongolia Talks

Chinese state-owned nonferrous metals company, Chinalco, has said it is in talks with Rio Tinto about potential joint ventures in Mongolia and Guinea, according to reports in a Chinese newspaper on Wednesday.

The Oriental Morning Post quotes vice-president Lu Youqing as saying the companies are talking about developing joint-ventures for the Mongolian Oyu Tolgoi copper-gold project as well as the Simandou iron ore mine in Guinea.

Rio Tinto, Chinalco In Talks Over Guinea Iron Ore Field

Rio Tinto and Chinalco are in discussions regarding the development of the vast Simandou iron ore field in Guinea.

Talks have been taking place in Beijing ahead of a visit to China this weekend by Rio Tinto chief executive Tom Albanese.

Any deal is likely to see Chinalco finance the next stage of pre-development, while Rio will remain the senior partner in the venture.

The two were in talks last year about a $19 billion tie-up, but the deal fell apart last June amid recriminations on both sides. However, it seems the Chinese have kept the door open for other types of co-operation. Repairing relations is a top priority for Mr Albanese while Chinalco president Xiong Weiping has refrained from publicly criticising Rio.

Meanwhile, a report by a Chinese government body failed to apportion blame for the talks’ failure to either party. The State Council's Development Research Centre added "The failure of the merger did not mean no other co-operation opportunities existed, or the breaking of mutual relations."

The two companies are believed to have discussed iron ore exploration in China and bauxite and alumina refining interests in north Queensland.

Austral To Buy Guinea Assets

Austral Coke & Projects through its Guinea based subsidiary, Astra Energy SARL, has acquired 16 prospecting licenses of rich iron ore, bauxite and manganese ore blocks measuring 12,63,000 acres in Guinea in West Africa. The contract term is for 30 years with an extendable term of another 30 years. Austral is the first Indian company to get licenses in Guinea and biggest in terms of land acquired. (12,63,000 acres)

The expected reserves of 3.5 billion tons of bauxite spread over 2,950 sq kms under six licenses. Iron ore expected services of 1.8 billion tons spread over 1,455 sq kms under three licenses and, manganese reserves are expected at 53 million tons spread over 710 sq kms under seven licenses.

The company plans to extract annual quantity of 5 million tons of bauxite and iron ore and 0.10 million tons of manganese from these mines initially. It also has 6 coal prospecting licenses admeasuring 100,000 hectares in Mozambique through its 95% controlled Mozambique-based subsidiary Astra Mining.

Source: Myiris

Rio Tinto Accused Over Guinea Iron Ore Mine

Rio Tinto Plc, the world's No. two mining company, was accused by the Guinea government of defying its authority and threatening civil peace in a dispute over an iron-ore mine, the London-based Times reported.

The accusation was contained in a June 26 letter by Mahmoud Thiam, Guinea's mines and energy minister, to Rio Chairman Jan du Plessis and Tom Albanese, the chief executive officer, and puts in question the future of the Simandou mine, one of the Anglo-Australian company's most important development projects, the newspaper said.

Guinea revoked half of Rio's licenses for Simandou in December; the company challenged the decision and has refused to move its equipment from the disputed area, the Times said.

In its response to the minister's letter, Rio said it has indicated its wish to conduct discussions in good faith and is confident of its legal standing, the newspaper added.

Source: Bloomberg

China Knocked Back Guinea Iron Deal

China has underscored its power in the developing world by revealing it was offered a huge African iron ore field seized from Rio Tinto, but declined out of "sensitivity" to international repercussions.

The offer, by late Guinea dictator Lansana Conte to Chinese companies including Chinalco, has implications for the Australia-China relationship, and Chinalco's $US19.5 billion ($A27 billion) investment bid in Rio Tinto.

Rio had sunk $600 million into Guinea's Simandou iron ore concession and had planned to invest another $10 billion to make it the largest iron ore mine outside of Australia and Brazil.

Wang Wenfu, who leads Chinalco's overseas acquisition team, which includes its pursuit of 18 per cent of Rio Tinto, told The Age that the Guinean Government last year offered to hand Rio Tinto's iron ore tenement to Chinese state-owned companies in exchange for railways, roads, ports and hydroelectricity projects.

The Chinese Government has already built a 50,000-seat sports stadium, a national assembly building and other landmarks in the Guinean capital, Conakry, and provided services including training for the army's special forces.

"The Guinea Government was trying everyone in China, including Chinalco," Mr Wang said.

Ultimately, some time after the August Olympics, attended by Mr Conte, Beijing declined.

"The Chinese Government encourages Chinese companies to go to Africa, but they are also sensitive to the international results," said Mr Wang. "Chinalco said no - it wouldn't have been professional."

He added African countries wanted to work with the Chinese Government because of its history of support there, demonstrating how China's influence in Africa could prove useful for Rio and Australia.

"It's an example of how Chinalco could enhance the position of Rio Tinto. This sort of thing is happening wherever you go in Africa." He also said China might not be so accommodating of Australia's international interests if Chinalco's investment in Rio was not approved by the Australian Government.

The episode shows how China is pulling back from a previously gung-ho attitude to investing in unstable developing nations.

"China is getting better aware of the practices of African governments to divide and rule among Chinese companies and foreign powers," said Zha Daojiong, professor of international relations at Peking University.

But China's decision refuse the multibillion dollar deal has not yet helped Rio Tinto's interests in Africa.

Late last year Mr Conte handed the northern half of Rio's Simandou tenement to BSG Resources Mining & Metals, controlled by a controversial Israeli diamond-mining billionaire, Benny Steinmetz. "Mr Steinmetz will see us in court," said Sam Walsh, head of Rio Tinto's iron ore division.

In one version of events, Guinean politicians decided to end Rio's tenement at Simandou because they were unhappy that Rio wanted to connect the proposed mine directly to an existing port in Liberia, rather than build a railway along the length of Guinea to a new port on its coast.

"For them, it's if you invest in our infrastructure, we'll pay you back with mining resources," said Mr Wang.

In another version, Rio was also considering the indirect railway-and-port option and only lost its grip on Simandou when some Beijing leaders systematically courted Mr Conte.

Mr Walsh said his company had talked with Chinalco - which has bauxite exploration activities in Guinea - about running Simandou as a joint venture, but the discussions were superseded by more comprehensive investment talks after BHP Billiton dropped its hostile takeover bid for Rio Tinto in November.

Guinea is one of the world's poorest and most ill-governed nations, with annual per capita income of just $US442 ($A612) and is ranked 173 out of 180 countries on Transparency International's corruption perception index.

In late December, Captain Moussa Dadis Camara announced that Mr Conte had died and that he had seized power.


Mr Walsh said the new dictator has not overturned his predecessor's decision to deprive Rio of its tenement rights. "We're now in a hiatus," said Mr Walsh, "But we are confident we retain legal rights to the full Simandou tenement."

Rio has said it plans to mine more than 70 million tonnes of iron ore a year in Simandou and possibly as much as 170 million.

Mr Walsh said Rio had been reducing its work in the southern half of the tenement, where the company has focused on development, until clarity was restored.

Source: Melbourne Age

Guinea To Probe Bauxite Privatisation

Guinean President Moussa Camara said he has asked the country’s Justice Ministry to consider legal action over a 2006 transaction that gave control of the Friguia bauxite and alumina complex to United Co. Rusal.

The Guinean government was paid a fraction of the amount the company was valued at by consulting firms, Camara said on state television late yesterday.

“Guinea has to exercise its rights by getting back this factory which belongs to it,” Camara said. “It is not a question of leaving this refinery, which has to serve future generations.”

Camara took power on Dec. 23 after a coup that followed the death a day earlier of Lansana Conte, who had ruled the west African country for 24 years. Conte’s government concluded the agreement with Rusal, and Camara’s government has said mining deals made with the previous regime will be probed.

“The decision has been made to establish a commission on the privatisation of Friguia, which will thoroughly study the situation and give its final conclusion,” Rusal spokeswoman Elena Shuliveystrova said by e-mail. “We, Rusal, welcome this decision because Rusal privatized Friguia legitimately and in full compliance with the legislation.”

Friguia has the capacity to produce 640,000 metric tons of alumina and 1.9 million tons of Bauxite a year, according to Rusal’s Web site. Bauxite, an ore, is used to make alumina, which in turn is used in the manufacture of aluminum. Guinea is the world’s biggest bauxite exporter.

Guinea agreed to let Rusal buy full control of Friguia, Rusal said in April 2006. Rusal, which had been operating the mine through a concession, bought 100 percent of Friguia from the state and acquired the 15 percent it didn’t already own in Alumina Co. of Guinea, which manages Friguia. The Russian company didn’t give a purchase price at the time.

Camara said Rusal paid $19 million for the assets, while consultants had valued it at $257 million. The president, who didn’t name the consultants, also said action will be taken against the Guineans who negotiated the transfer of the company to Rusal.

Guinean ministers arranged the sale without going through the national privatisation company, Momo Sacko, a government lawyer, said today, according to Reuters.

Anatoly Patchenko, the head of Rusal’s Guinean operation, has taken refuge in the Russian embassy in the African country’s capital, Conakry, Guinea’s state-owned radio reported.

Separately, Rio Tinto Group is considering developing an iron ore mine in Guinea, while AngloGold Ashanti Ltd. owns a gold mine in the country.

Source: Bloomberg

BSG Delays Work At Simandou Site

BSG Resources, the mining company controlled by Israeli diamond investor Beny Steinmetz, said it has been “temporarily” delayed from starting work at its Simandou concession in Guinea, part of which it was awarded last month after the area was stripped from Rio Tinto Group.

“There was some confusion about the boundary between blocks two and three, which is the line between us and Rio, so to end confusion we agreed to stop work until the exact geographical boundary is marked,” said Chief Executive Officer Marc Struik by phone from Johannesburg today. “It’s a bit of a tense situation, so it’s important to avoid ambiguity.”

On 11 December Guinea ordered a “compulsory relinquishment” of the northern half of Simandou by Rio, the world’s second-largest iron-ore producer. The country, run by a military junta since the death of President Lansanna Conte on 23 December, awarded blocks one and two in the northern part to BSG, while confirming Rio’s right to the southern section.

Rio maintains it is entitled to the entire licence.

“We stand by our view that we have the legal claim over the Simandou concession and would like to discuss the situation with the government at an appropriate time,” said Rio spokesman Nick Cobban. While he said he is unaware of any discussion, Rio has invested $450 million in the project and “continues to conduct essential exploration work” there, he said.

However, Struik claims there is no confusion about the license. “We’ve been granted a three-year exploration permit by the Guinean government during which time we have to carry out a certain amount of work.”

Government engineers are at Simandou and should take no longer than two weeks to mark the boundary “We’re ready to go at the site, and that’s going to happen in the next week or so,” Struik said.

BSG has been conducting drilling and exploration at sites adjacent to the blocks it was awarded since 2006, Struik said on Dec. 11. Mr Steinmetz also controls resources in the Democratic Republic of Congo, Sierra Leone and Macedonia.

Source: Bloomberg