Lakshmi Mittal’s ArcelorMittal (MT) and Glencore Plc are among potential bidders for Guinea’s Simandou project, the world’s largest untapped iron-ore deposit, after it was seized from Israeli billionaire Beny Steinmetz in April, according to people familiar with the matter.
ArcelorMittal, the world’s biggest steelmaker, has declared an interest in the bidding process for two licenses covering the Simandou project in Guinea, according to four people who asked not to be identified as the talks aren’t public. Glencore is also interested, people familiar with its plans said.
Leading mining and steelmaking companies are jostling for a share of the riches contained in Simandou, a remote, iron-bearing mountain range, to take advantage of prices for the raw material that have risen about 50 percent since 2008. Guinea has estimated that Simandou may cost $20 billion to develop, largely because it needs a 650-kilometer (400-mile) rail link.
Spokesmen for ArcelorMittal and Baar, Switzerland-based Glencore declined to comment. The Wall Street Journal reported last month that Glencore was interested in Simandou.
The iron-ore position of Glencore pales in comparison with rivals BHP Billiton Ltd., Rio Tinto Group and Vale SA. (VALE5) Still, Chief Executive Officer Ivan Glasenberg has previously expressed reluctance to invest in expensive new mining operations known as “greenfield” projects. The rail and port component of Simandou has been estimated to cost more than $10 billion.
The project’s current lack of infrastructure may deter Glencore from bidding, one of the people said.
“The government of Guinea is confident of a strong line up of interested parties in the Simandou concession,” an external spokesman for the government said in an e-mailed statement.
Guinea in April revoked rights to half the Simandou project controlled by a venture between Steinmetz’s BSG Resources Ltd. and Brazil’s Vale, following claims of bribery and corruption. The decision has sparked legal battles for control of the asset.
BSGR plans international arbitration with Guinea over the seized licenses, it said after being stripped of the asset. Any attempt to negotiate fresh rights to Simandou would be challenged as unlawful, the company said in May.
For the rest of this article, click here: http://www.bloomberg.com/news/2014-07-31/mittal-glencore-said-to-mull-bid-for-seized-guinea-mine.html