Guinea, Rio Tinto To Meet on Iron Ore Project

LONDON--The Guinean government and miner Rio Tinto PLC (RIO.LN) will meet next week to discuss development of the massive Simandou iron ore project in the West African country as costs for the project escalate, to as much as $20 billion in a recent estimate, Guinea's mining minister said Wednesday.

The meeting, to take place between June 19 and 22, may involve discussion on the timing and financing of the project, although it's now clear the project won't come into production as had been expected in 2015, said Minister Lamine Fofana at a briefing with reporters and mine sector investors.

"We're in open discussion with Rio Tinto," Min. Fofana said. "We're taking into account technical aspects to come to an acceptable chronogram for implementation of this project. Today we can't tell you when this will happen."

Rio Tinto is developing Simandou in concert with partners Aluminum Corp. of China Ltd. (ACH) and the International Finance Corp. It is a high-grade iron ore project in a mountain range in southeastern Guinea, forecast to produce 93 million metric tons of iron ore annually. Simandou was estimated in 2011 as needing $9 billion financing, but the estimated cost in a Rio Tinto engineering study conducted four months ago has now risen to $20 billion, according to Min. Fofana.

"We can't say for sure if it will be $16 billion, $17 billion or $20 billion, that's why it's taking so long," Min. Fofana said.

The minister spoke of an "increasing trust" that has been building up between Rio Tinto and the government of the West African country on the development of the project, following recent changes in the country's mining code.

"We're not seeing Rio Tinto and Guinea on opposite sides," Min. Fofana said. "We're now on the same side.. and looking to finance this project hand in hand."

Rio Tinto officials didn't immediately comment on the minister's statements when approached by The Wall Street Journal Wednesday.

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