Mining giant Rio Tinto Ltd
(ASX:RIO) has lost its chance to regain full ownership of the Simandou iron ore deposit in Guinea, west Africa, following a $US2.5 billion deal between Brazil’s Vale and an Israeli diamond investor.
The deal between Vale and BSG Resources covers the northern end of the Simandou deposit, including the blocks previously owned by Rio.
Vale will pay $500 million up front for 51% of BSG, and the remainder as the projects meet targets.
BSG picked up the tenements after Guinea confiscated them from Rio in 2008 for being too slow in advancing development plans for the deposit.
Rio Tinto had hoped to convince Guinea to reinstate its full ownership of Simandou, but now that Vale is involved, it is highly unlikely.
Vale believes the Simandou tenements are among the best undeveloped iron-ore deposits in the world, with potential for a large-scale and long-term project with low operating and investment costs.
Rio Tinto posted a profit of $5.432 billion for calendar 2009.
