[miningmx.com] — RIO Tinto said on Friday it would pay the government of Guinea $700m after reaching an agreement to resolve all outstanding
disputes over blocks 3 and 4 of its Simandou iron ore project.
The company said in an emailed statement to Reuters that it
had signed a settlement to secure Rio’s mining title for the
southern Simandou blocks, paving the way for some $10bn
in investment and the first shipment of iron ore by mid-2015.
Anglo-Australian Rio once controlled all of the Simandou
concession but it was stripped of the northern half, and last
year Guinea’s government said it might also lose the southern
blocks, where Rio is looking to partner with China’s Chalco.
“Today’s agreement gives us the certainty we need to allow
us to invest and move forward quickly so we can bring this
great resource into production,” Sam Walsh, Rio Tinto Iron
Ore’s chief executive, said in the statement.
Guinea stripped Rio of blocks 1 and 2 during the rule of
former president Lansana Conte, who died in December 2008 and
was replaced in a bloodless coup by a military junta.
Rio has long sought to win the blocks back but BSG, a firm
controlled by Israeli billionaire diamond trader Beny
Steinmetz, secured them and signed a deal in April last year
with Brazilian mining giant Vale SA to
develop them.
In recognition of the resolution of all outstanding issues
and finalisation of new investment agreement terms over the
remaining blocks, Simfer, Rio’s Guinean subsidiary, will pay
$700m to the Guinean treasury, the statement said.
It added that the payment would be made after the passing
of a presidential decree granting Rio the mining concession and
the approval of its proposed Chalco and Rio Tinto
Simandou joint venture.
Rio is in talks with Chalco for a JV to develop Simandou.
“Once the JV agreement with Chalco is complete, Rio Tinto’s
95% interest in Simfer will be held in the new JV. Chalco will acquire a 47% interest in the new JV by providing $1.35bn on an ongoing earn-in basis within several years,” the statement said.
According to the terms of the agreement, Guinea’s
government will have the right to take a stake of up to 35% in the project, including 15% at no cost to the
government, which will be held by a state mining firm.
Other terms of the deal included:
A stabilised fiscal regime agreed by the parties which
will apply for the lifetime of the mine.
taxable profit, followed by a general tax rate of 30 percent.
exported ore.
dividends. All imported goods used for construction and
maintenance will be exempt from value-added tax and customs
duty.
constructed to transport ore from mine to ship.
