Rio hopes raised on stalled Guinea mine
The Guinean government set the tone for the meeting at the weekend when it revealed a willingness to allow a third party to build the railway for the giant iron ore project, which could cost up to $US20 billion ($20.88 billion).
The comments by Guinean President Alpha Conde could help advance the project, which has been delayed by Guinea's inability to secure finance to cover its share of costs.
"What's important to us is that the railway is built, so we're open to any solution that allows the construction of the railway," Mr Conde said. "We are open to a partner financing 51 per cent or all of it; that depends on the agreement we have with Rio Tinto."
The project has been frozen for several months as Guinea struggles to secure funding for its share, and while Rio completes a major cost-cutting and divestment program.
Just last week, another Guinean minister revealed that Rio would not have the mine in production by 2015 as planned.
Rio's partners in Simandou include Chinese state-owned enterprise Chalco, and the World Bank's International Finance Corporation.
Rio Tinto chief executive Sam Walsh participated in a summit involving British Prime Minister David Cameron on Saturday, when he called for pro-growth policies in the developing world, and pledged support to the new transparency laws for the resources sector that were recently passed by the European Union.
The laws will increase disclosure levels around payments that mining, oil and gas companies make to governments on a "project by project" basis.
Mr Walsh's support came despite Rio and seven other big resources companies (Xstrata, BHP Billiton, Total, BP, Royal Dutch Shell, BG and Anglo American) campaigning against "project by project" reporting on the grounds it would not be effective.
Frequently Asked Questions about this Article…
The Simandou iron ore project is a giant mining development in Guinea that involves building a mine and a dedicated railway to export ore. It's important for investors because delays or changes to the project can affect the timelines, costs and potential revenues for major partners like Rio Tinto and its co-investors.
According to the article, Rio Tinto is the lead company in Simandou alongside Chinese state-owned Chalco and the World Bank's International Finance Corporation (IFC).
The project has been frozen for several months mainly because the Guinean government has struggled to secure financing for its share of the costs. At the same time, Rio Tinto has been focused on a major cost-cutting and divestment program, contributing to the delay.
Guinean President Alpha Condé said the country is open to allowing a third party to build the railway and is willing to consider a partner financing 51% or all of the railway construction, depending on the agreement with Rio Tinto.
The article states the railway and related development for the Simandou project could cost up to US$20 billion (about $20.88 billion).
The article reports that a Guinean minister recently revealed Rio Tinto would not have the mine in production by 2015 as had been planned, indicating a pushed-back timeline.
Rio Tinto CEO Sam Walsh publicly pledged support for new European Union transparency laws that increase disclosure of payments by mining, oil and gas companies to governments on a project-by-project basis. For investors, stronger disclosure can improve visibility into government payments and project economics, even though Rio and several other big resource companies previously campaigned against project-by-project reporting.
The article says Rio Tinto and seven other big resources companies campaigned against project-by-project reporting: Xstrata, BHP Billiton, Total, BP, Royal Dutch Shell, BG and Anglo American.
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