Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Rio Tinto (LON:RIO) said it expects its Simandou iron ore project in Guinea to begin producing by mid-2015.
The company has approved $211 million in continuing studies and $1.12 billion to purchase equipment and fund early earthworks.
The Australian reports Rio saying the $9.8-billion project is gaining momentum with construction works well underway:
Work has started on the marine offload facility near the preferred port site of Ile Kabak, 50km southeast of the capital Conakry, which enables the introduction of heavy equipment for construction.
Simandou is a joint venture between Rio Tinto and Chinese company Chalco, which has agreed to pay US$1.35 billion for a share of the project, which still has to clear regulatory approvals by the Guinea government.
Rio paid Guinea $700 million in April and gave it a 35% stake in Simandou as part of the country’s new mining laws, which allow Guinea to increase its stake in mining projects from 15% to 35%. Vale SA (NYSE:VALE), which also has a concession in the deposit, conceded the same percentage earlier this month.
The Simandou concession was split by the Guinean government into four “blocks”, with Rio Tinto owning Blocks 3 and 4, and Blocks 1 and 2 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 in the second half of next year.
