BHP Billiton close to selling Guinea iron ore stake

The world’s biggest steelmaker is in “deep, deep discussions” with BHP to acquire the company’s stake in a major Guinean iron ore deposit.

ArcelorMittal, the world’s biggest steelmaker, is in “deep, deep discussions” with BHP Billiton to acquire the Australian mining company’s stake in a major Guinean iron ore deposit, two people familiar with the matter have said.

A deal, potentially worth as much as $US500 million, would bring an end to BHP’s months-long attempt to find a buyer for its 41.3 per cent stake in Mount Nimba, a rich deposit located close the Liberian border.

ArcelorMittal and BHP Billiton declined to comment.

Other partners in the project include Newmont Mining and France’s Areva.

“Conceptually it’s done, everyone is very happy that they can do it,” said one person, who is close to the Guinean government.

ArcelorMittal is already heavily invested in iron ore projects in neighbouring Liberia. Crucially, it operates a Liberian rail line to the Atlantic port of Buchanan, the only existing way of carrying the ore mined at Mount Nimba to export markets. As things stand, any company that buys BHP’s stake in Nimba would need to come to an agreement with ArcelorMittal, Liberia and Guinea to use the railway.

With little or no other infrastructure available, negotiating access to the railway is essential for profitable mining at current iron ore prices.

For BHP Billiton, selling out of Mount Nimba would hasten its plans to exit West Africa and focus its investments elsewhere in the world.

Chief executive Andrew MacKenzie has made streamlining the company one of his main priorities, which includes cutting back spending on big, capital intensive projects.

Although ArcelorMittal had initially been one of a group of suitors when BHP Billiton opened sales talks in late 2012, Brazilian firm B&A Mineraçao, emerged as an early frontrunner. However, lengthy negotiations with B&A, founded by former Vale boss Roger Agnelli, collapsed earlier this year, said a third person, a London-based banker, who had knowledge of the talks.