RIO TINTO’s share of Simandou in Guinea, the world’s richest untapped iron ore deposit, described by sceptics as a “pipe dream.” Source: AECOM

RIO TINTO’s share of Simandou in Guinea, the world’s richest untapped iron ore deposit, described by sceptics as a “pipe dream.” Source: AECOM

Glencore Pursues Stake in Guinea's Simandou

Issue 114, February 2015

Trading giant Glencore is actively pursuing a stake in Guinea’s Simandou iron ore deposit, sources tell Global Mining Observer.

Half of Simandou, the world’s most contested iron ore deposit, is co-owned by Rio Tinto and China’s state-owned Chinalco, whilst half was stripped from BSGR, the private mining arm of diamond tycoon Beny Steinmetz, by Guinea’s government last year.

Reports by Bloomberg and Africa Mining Intelligence of an imminent retender of BSGR’s blocks, seized under a bribery probe funded by billionaire George Soros, are considered premature, with neither the Presidency nor the World Bank expecting bidders to publicly emerge until a resolution is reached between Guinea and BSGR, currently suing the government through a World Bank court.

Glencore however is seen as the firm favourite to ultimately land the disputed territory. Chief executive Ivan Glasenberg is famously shy of greenfield projects, preferring cash flowing assets and incremental brownfield expansion, but Simandou is seen as potentially valuable hard currency for Glencore in negotiations with China over a possible merger with Rio Tinto.

Beijing has barred Chinese groups from buying into Simandou, sources say, to avoid undermining Chinalco’s existing alliance with Rio. If Glencore can gain a foothold at Simandou however, it could pledge the deposit to Chinalco in any backroom carve-up of Rio’s assets. Chinalco has long held ambitions over Rio Tinto, emerging with a 9.8 per cent stake after a failed takeover putsch in 2009.

Glencore could face surprisingly little competition for Simandou, with Chinese groups out of the running and steel giant ArcelorMittal thought to be only considering deposits in the region that could utilise its existing railroad through Liberia.

BHP Billiton is meanwhile busy exiting Guinea, selling its Nimba project to Arcelor, subject to a presidential decree allowing ore to be exported via Liberia. The granting of a decree remains far from certain, sources connected to Guinea’s president say. 

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