Chalco wants $2.2bn for stake in Simandou iron ore project
Chinese giant Chalco wants $2.2 billion for its stake in a venture with its state-owned parent company Chinalco, which mainly invests in Guinea’s Simandou iron ore project, The Australian reports.
According to the company, world number two miner Rio Tinto (LON, ASX: RIO) sold China a stake in the $20 billion project in 2010 on the cheap amid fears the West African country would revoke its mining leases.
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.
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.
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