From the SMH:
Global miner Rio Tinto has slowed progress of its multi-billion investment in Guinea’s untapped Simandou iron ore deposit and slashed staff, government sources in the West African country said on Monday.
The sources, who declined to be identified because of the sensitivity of the topic, spoke after weekend talks between top Rio Tinto executives and government officials, during which they said the miner had announced it needed the government to progress on financing and the agreement underpinning the project before it could move ahead.
The sources said Rio Tinto – under pressure from investors to cut costs and rein in spending – had cut staff in Guinea by 90 per cent.
“(Rio Tinto) have essentially announced they have frozen their investments in Guinea, arguing that they are waiting for a more stable and secure regulatory framework from the government,” a senior government official said, asking for anonymity.
Two other government sources, including an acting minister and a former minister who has retained a role in the administration of President Alpha Conde, confirmed that Rio Tinto had announced the investment freeze.
Rio Tinto denied it had stopped work, but confirmed it was working with the government on outstanding issues including financing for the government’s share of ambitious planned infrastructure.
“The Simandou project is definitely not frozen and Rio Tinto continues to progress the project and is committed to its development,” a spokesman for the company said. “The current priority is finalising the investment framework and for the Government of Guinea to secure its financing.”
The spokesman said talks between Rio Tinto and the government had been “constructive”.
Government sources said Rio Tinto’s new chief executive Sam Walsh along with other company managers met with both President Conde and Mines Minister Mohamed Lamine Fofana to inform them of the company’s decision.
The sources said Walsh told Conde and Fofana that Rio Tinto would reduce its budget by $600 million and cut its staff in Guinea to five people.
Makes sense for Rio and long term iron ore. Simdandou represents is another 100 million tonnes of cheap iron ore. Can’t imagine Rio’s Chinalco partner is all that pleased and given the Guinean government’s history, one would not be at all surprised to see the concession itself wither.
