Rio Tinto says Chinalco pact for Simandou iron ore project stake has lapsed

[MELBOURNE] Rio Tinto Group, the world's second-biggest miner, said a pact to offload its stake in the US$20 billion Simandou iron ore project in Guinea to its Chinese partner, Aluminum Corp of China, has lapsed.

The parties had struck a non-binding agreement two years ago, when Rio said it could receive payments of between US$1.1 billion and US$1.3 billion for the stake, dependent on the project being developed. Rio and its partner, known as Chinalco, will work with Guinea's government "to explore other options to realise value" from the asset, Rio said on Monday in a statement.

Development of Simandou, which holds an estimated two billion tonnes of iron ore, has been hampered by issues including infrastructure requirements. Rio said in 2017 it had decided the project's estimated US$20 billion development costs were too high.

London-based Rio is assisting the authorities in three countries over investigations into a US$10.5 million payment to an external consultant made in 2011 in connection with the project. The company in 2016 alerted the authorities including the US Department of Justice and the UK's Serious Fraud Office to the payment.

Rio holds about 45 per cent of the project, while Chinalco has about 40 per cent and Guinea's government owns a 15 per cent stake, the company said.

BLOOMBERG