Mining giants pursue Guinea

BHP Billiton, Rio Tinto and Fortescue Metals are among a host of miners and steelmakers who are reportedly interested in bidding for high-grade Simandou iron ore tenements in Guinea, expected to be stripped from Israel’s BSG Resources and Brazil’s Vale.

But Fortescue has denied the report and BHP has recently said it wants to exit West Africa.

A Guinean government committee has recommended BSG and Vale be stripped of their rights to the tenements, located north of where Rio is planning its $US18 billion ($19bn) Simandou mine, because of evidence BSG had obtained the rights through corruption, according to a report that has been seen by The Wall Street Journal.

The two northern tenements were stripped from Rio in 2008 and given to BSG.

Vale then teamed up with BSG in a $US2.5bn deal to enter the ground, which hosts large amounts of some of the world’s best quality iron ore.

The recommendation is not binding, but it is expected to be taken up by President Alpha Conde, who empowered the committee to investigate the terms under which BSG, run by diamond tycoon Benny Steinmetz, acquired the tenements.

BHP, Rio, Fortescue, Anglo American, Chinalco and Glencore had all informed Guinea they could be interested in participating in a tender should the concession become available, the Journal said, citing a government source. Fortescue denied it had expressed interest.

“Fortescue is focused on ... ­delivering maximum value from our investment in the Pilbara to repay debt and move to a dividend payout ratio,” a spokeswoman said.

Neither BHP nor Rio would comment on the report. BHP is trying to sell out of its Nimba iron ore deposit in Guinea and has been more reticent than Rio to take on projects in risky jurisdictions. But, given the 66-68 per cent iron ore grades at Simandou are higher than at its Pilbara ground, it would not be surprising if BHP at least took a look at what was on offer.

Rio chief Sam Walsh has said the rights could be attractive, ­depending on how they were ­offered.

The steelmakers ArcelorMittal, He­bei Iron & Steel, Nippon and Hyundai have also told the government they would be interested in the tender process for the ground.

The developments on the norther Simandou tenements come as talks progress between the government and the Rio-led team, which includes Chinalco and the International Finance Corporation, to develop Africa’s biggest mining project on the southern tenements.

As of yesterday, an agreement on an investment framework, which had been targeted for the first quarter, had not been signed.

Additional reporting: The Wall Street Journal