Rio Tinto Simandou at stake

Company News

Rio Tinto (ASX:RIO) is adamant it has rights to the whole of the Simandou iron ore deposit in Guinea after the government threatened to take away another part of its mining rights.

In a statement released overnight, Rio said it has always maintained firm rights to the entire mining concession that were granted based on the 2003 Mining Convention between Rio Tinto and the Government of Guinea.

But the government of the West African nation sent a letter to Rio on Monday warning it not to pursue legal action to recover parts of the lease that it lost in 2008.

The government has informed Rio of its decision to acquire 20% of the half of the Simandou project still under Rio Tinto's control.

In March, Rio signed a $US2.9 billion pact with Chinese metals group Chinalco to develop Simandou, which it bills as the world's largest undeveloped iron ore deposit.

In the year to December 30 2009, Rio Tinto posted a $5.4 billion net profit.