Chalco wants $2.2bn for stake in Simandou iron ore project

The deal implied that Chinalco would hold on to iron-rich mountain deposit and included a $700 million “settlement payment” by Rio to Guinea for the delays in developing four Simandou tenements, half of which had already been stripped from Rio, reports The Australian.

Chalco and its Chinese partners have spent $1.85 billion on Simandou, including $1.35 billion to enter the deal in July 2010.

Currently Rio Tinto owns 51% of the ambitious project, Chalco 45% and the World Bank the remainder.

In September, the parties signed a draft agreement with the government of the West Africa nation that calls for initial exports only by the end of 2018, three years later than initially scheduled.

But both Guinea and China are believed to want to bring the start-up day forward by at least a year, a move that has the potential to shift the balance in the global iron ore trade.

Rio Tinto is developing the southern part of Simandou, which is expected to produce over 95 million tonnes of iron ore per year, and so far it has spent more than $3 billion building open pits in the area.

Chalco’s stake sale will have to be approved first by Rio Tinto and the Chinese government.

Image courtesy of Rio Tinto, © Copyright 2013 – – All rights reserved.