Botswana Diamonds gets environmental nod for Thorny River
Company expects the mining permit to be granted within the next six weeks, following further community consultations.
Guinea is home to some of the richest and easily exploitable iron ore fields outside of Australia’s Pilbara region and top producer Vale’s Brazilian home base.
In May last year, the Guinea government and Rio Tinto (LON:RIO) and its partners – China’s Chalco together with the World Bank – inked a game-changing $20 billion deal for the southern section of the Simandou iron deposit.
At full production Rio’s Simandou concession would export up to 95 million tonnes per year for 40 years and would catapult Rio past Vale as world number one.
Rio Tinto held the licence for the entire deposit, but was stripped of the northern blocks in 2008 by a former dictator of the country, one of the poorest in Africa.
BSG Resources, a company associated with Israeli diamond billionaire Beny Steinmetz acquired that concession later that year after spending $160 million exploring the property.
In 2010 BSGR sold 51% to Vale (NYSE:VALE) for $2.5 billion, but the Rio de Janeiro-based company stopped paying after the first $500 million when the investigation was launched.
The Guinea government withdrew the mining permit in April, accusing BSGR of obtaining its rights through corruption.
The West African nation plans to auction the northern half in the next few months, Guinea’s Minister of Mines Kerfalla Yansane told The Wall Street Journal on the sidelines of the Mining Indaba conference in Cape Town, South Africa.
Yansane added that the country has already signed memoranda of understanding with “several large industrial companies” to build the related infrastructure and that the current weakness in the iron ore price is not a concern, because any production is at least five years away.
The price of the steelmaking raw material was trading at $62.00 a tonne on Wednesday, not far off five-and-a-half year lows struck last week on the back of major oversupply. Few are predicting a pick-up in the price, with some predictions calling a bottom only in the $30s.
BSGR is not giving up its claims to the blocks saying it will contest any transfer of the assets. “The tender will not be taken seriously by the market because they are well aware of the contested nature of the assets,” Dag Cramer, a director of BSG Resources, told the WSJ.
Further complicating matters Rio Tinto has filed a lawsuit for billions of dollars against both Vale and BSGR for what it called a “steal” of its previously-owned concession.
Possible bidders include Rio Tinto itself while Vale could even re-enter the fray. World number four miner Glencore, which has no sizeable iron ore assets, has shown interest in high-level talks with Guinea over the northern section.
