Guinea Working With Vale on Simandou Deal, President Says

Guinea is seeking a way for Vale (VALE3) SA, the world’s biggest iron-ore producer, to resume work at the Simandou project in the West African nation, President Alpha Conde said.

Vale will be one of the big partners of Guinea in iron ore and it’s the Simandou project which is interesting for Guinea so we will find a solution with Vale,” he said yesterday in an interview with Bloomberg Television in Davos, Switzerland. “We’re working on it.”

Vale, which bought a 51 percent stake in a section of Simandou in 2010, put the scope and schedule for its $1.26 billion Zogota iron-ore project in Simandou South under review in October. The 2 million-metric-ton project was expected to start producing in the second half of last year. The company, which is suspending operations at unprofitable mines as it cuts costs, wants greater clarity from the government on regulations and infrastructure cost uncertainties before restarting work, Chief Executive Officer Murilo Ferreira said Dec. 6.

Vale’s press office in Rio de Janeiro yesterday declined to respond to Conde’s comments.

Vale’s Simandou partner is BSG Resources Ltd., a company controlled by Israeli businessman Beny Steinmetz, which in November said it received a letter from the Guinea government regarding an investigation into how the venture with Vale obtained mining rights. The project may cost as much as $10 billion to develop, BSG said in a statement on its website.

Rio Tinto

Vale rose 0.1 percent to 39.52 reais at 1:02 p.m. in Sao Paulo. The stock has declined 3.4 percent this year through today, underperforming the 1.7 percent increase of the Brazilian benchmark index.

Guinea also offered Rio Tinto (RIO) Group “a strategic partnership for 50 or 100 years” to develop the company’s rights in another section of Simandou, Conde said yesterday, without providing details.

“Now the ball is in Rio Tinto’s court,” he said. “We have no worries about the financing.”

David Luff, a Melbourne-based spokesman for Rio, said he wasn’t immediately able to comment.

Rio Tinto rose for the first time in three days, adding 1.5 percent to 3,553.00 pence at 3:02 p.m. in London.

Separately, Conde said that Guinea, which neighbors Mali to the west, wants more nations to get involved in a battle to defeat al-Qaeda in the Islamic Maghreb in northern Mali. He said that without wider involvement, Mali risks becoming another Afghanistan, which harbored terrorists including Osama bin Laden, after two decades of war tore the nation apart.

Algeria Plant

Weapons and money have flooded the Sahel region of Africa after the fall of Libya President Muammar Qaddafi in 2011, threatening to destabilize governments in west and north Africa, according to the United Nations. Terrorists that seized an Algeria gas plant this month use northern Mali as a base, where they have collected millions of dollars in ransom, according to the U.S. Treasury.

The French military helped Mali recapture two towns this week, as foreign governments expressed concern that al-Qaeda in the Maghreb, which controls two-thirds of Mali, is using the northern part of the nation to operate as a base. The U.S. is providing intelligence and planes for the mission.

“If France hadn’t intervened, it would have been a disaster,” Conde said during the interview. “We need to prepare for a second war, a much tougher war, a much longer war, in the Sahara. If we want to avoid Sahara becoming the new Afghanistan, everyone needs to be involved in this war.”

To contact the reporters on this story: Caroline Connan in London at cconnan@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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