Categories: Base Metals / General Market Commentary / Precious Metals
Topics: General Base Metals / General Market Commentary / General Precious Metals

Chinese buy world's largest mining project

Chinese buy world's largest mining project

World number two miner Rio Tinto is exiting the world's largest mining project, by selling its stake in Guinea's Simandou iron ore to partner Chinalco, potentially opening up a new path to development for the $20 billion project.

According to a statement by Melbourne-based Rio the deal is worth between $1.1 billion and $1.3 billion payable when Simandou starts commercial production and based on output. Rio says a final agreement could be inked within six months. In February this year Rio wrote down the value of Simandou by $1.1 billion, before deciding to shelve the project.

Rio owns  46.6% of Simandou south; Chinalco's stake is 41.3% and the Guinea government holds 7.5%. Earlier this month the World Bank's financing arm – the International Finance Corporation – sold its its 4.6% interest.

Rio has already spent more than $3 billion on the project having first acquired the property in the late nineties. With complete control, Beijing-based Chinalco may revive the stalled project, no doubt with the backing of the central government. In September Chinalco took private its Hong Kong listed mining arm, primarily focused on copper.

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