Rio Tinto has signed a non-binding agreement to sell its stake in Simandou iron ore project in Guinea to Chinese state-owned firm Chinalco Mining Corporation.
The agreement provides the principal terms of sale as the binding agreement and is scheduled to be signed within six months.
Go deeper with GlobalData
Rio Tinto will secure payments of $1.1bn-$1.3bn based on timing of the project development.
The initial payment for shares will begin upon first production starting, on a per tonne basis.
Sale of the stake will provide an impetus to a stalled plan to develop untapped iron ore reserves in Guinea. Furthermore, it will open up opportunities for Chinese investment, reported Reuters.
See Also:
Welcoming the deal, Guinea's Minister of Mines and Geology Abdoulaye Magassouba urged for setting up of a joint working group with Chinalco to push the mining industry forward.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataMagassouba was quoted by Reuters as stating: "This is a very positive event for the project, but we still have long months of work and significant challenges to overcome for the effective relaunching of the project."
Rio presently owns a 46.6% interest in Simandou, Chinalco has 41.3%, while the government of Guinea has a 7.5%.
