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Vale SA (NYSE:VALE) will likely hand over 35% of its Simandou iron ore project to Guinea.
The Wall Street Journal (sub required) reports that Vale, one of the top three producers of iron ore, is working on an accord whereby the company concedes 35% of its portion of the Simandou project to the Guinean government. The accord falls in line with the country’ new mining laws, which allow the government to increase its stake in mining projects from 15% to 35%.
The pending agreement reflects the same percentage that Rio Tinto (ASX:RIO) conceded to the Guinean government back in April, which equated to a $700 million payment.
The Simandou concession was split by the Guinean government into four “blocks”, with Rio Tinto owning Blocks 3 and 4, and Blocks One and Two owned by a unit of Switzerland’s BSG Group, which later sold its majority interest to Vale.
Vale’s project is expected to start producing two million metric tons a year in the second half of next year, rising to 15 million tons a year in 2015 and full capacity of 50 million tons a year in 2020, reports WSJ.
Stamp of the Republic of Guinea containing a wart hog, circa 1975, is from Shutterstock
Comments
Playersdad
maybe Canada could learn something from the government of Guinea, perhaps Vale could give the Canadian government 35% of its Canadian nickel mines that way we would still have control of resources. the same goes for the rest of the multi nationals in all our resource sector.