Rio Tinto set to quit Guinea iron ore project with sale to Chinalco – by Barbara Lewis and Rahul B (Reuters U.S. – October 28, 2016)

LONDON/BENGALURU – Mining company Rio Tinto (RIO.AX)(RIO.L) has agreed to sell its stake in Guinea’s Simandou project to Chinalco (3668.HK), it said on Friday, potentially kickstarting the long-stalled scheme to develop the world’s largest untapped iron ore reserves.

For all the project’s huge potential, Rio has voiced frustration over the difficulty of drumming up financing, though industry sources said that the change of ownership could open up access to Chinese funding.

China, the world’s largest iron ore consumer, provides an obvious market for Simandou, which Guinea is counting on to spur economic growth after the West African country was hit by a crippling Ebola epidemic.

When fully operational, Simandou could double Guinea’s GDP, project partners have said. Rio has a 46.6 percent stake in the project, while state-owned Chinese metals producer Chinalco has 41.3 percent and the Guinea government 7.5 percent.

If the deal to sell out to Chinalco goes ahead, Rio Tinto will receive payments of between $1.1 billion and $1.3 billion based on the timing of the project’s development, it said in a statement, adding that the aim was to seal a final deal in less than six months.

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