Niron Metals, headed by the former boss of Xstrata Mick Davis, will develop Guinea’s Zogota iron ore deposit, previously owned by BSG Resources (BSGR).
The news, confirmed via an emailed statement, follows an agreement between Israeli tycoon Beny Steinmetz, BSGR’s owner, and the government of Guinea over the rights to Simandou, one of the world’s largest untapped reserves of iron ore.
“[BSGR’s deal] has paved the way for the creation of an effective mining partnership between Niron and the Government to mine this deposit,” it said, “The company looks forward to bringing this to fruition subject to the satisfactory settlement of all disputes between the parties.”
As part of that settlement, BSGR has relinquished its claims on blocks 1 and 2 of Simandou, whose development has been hindered by years of legal wrangling as well as the $23 billion cost of the required infrastructure.
Rio Tinto (ASX, LON:RIO), the world’s second largest iron ore producer, still holds a 45.05% stake in Simandou’s remaining blocks 3 and 4.
“At the request of the Republic of Guinea, a new group of investors (presented by and including Steinmetz) will exploit the Zogata deposit, in order to export iron ore, according to an accelerated timetable,” a statement quoted by Financial Times reads.
The Zogata project is expected to produce around 2 million tonnes of iron ore a year, which will be transported by rail and exported via a port in neighbouring Liberia.
Guinea’s government had previously stated that ore had to exported via the West African nation’s own ports.
Davis is well known in the mining industry. He led Xstrata from a $500 million business in the early part of the last decade to an operation so big that — at one point — it made a takeover offer for Anglo American (LON:AAL).
His latest venture, mining fund X2 Resources, ended up losing its backers as it was unable to score any deals in the three years since launch.