Guinea wants to bring one of the world’s richest iron ore deposits back to life

Guinea is trying to pen a new deal with Brazil’s Vale (NYSE:VALE), the world’s largest iron-ore producer, to either make it resume work at the Simandou project in the West African nation or surrender its rights, reports Financial Times (subs. required).

Guinea’s mining minister, Mohamed Lamine Fofana, told FT that a new agreement would need to be “updated to reflect the current law and the current realities,” adding that the elected government was looking for “strategic partnerships”.

The existing contract was signed under the dictatorships that preceded the presidency of Alpha Condé, who told Bloomberg in January that his government was working with Vale to ensure its continued engagement in the Simandou project.

Vale bought a 51% stake in a section of Simandou, one of the world’s richest undeveloped iron ore deposits, in 2010. But in October last year the miner put the scope and schedule for its $1.26 billion Zogota iron-ore project in Simandou South under review.

The 2 million-metric-ton project was supposed to start producing in the second half of 2012. But since the Rio de Janeiro-based company was severely hit by the slump in the commodity prices last year, it has been suspending operations at unprofitable mines, such as its coal operations in Colombia and its $6bn potash project in Argentina.

In addition, Vale is planning to sell its Brazilian oil and gasfields, worth roughly $1 billion.

The company is also said to be selling its Canadian Kronau potash project, after putting the $3 billion project on hold last August.

(Image of traditional dance in Guinea, courtesy of LeVoyageAutrement)

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