Reuter reports that Rio Tinto, a mining leviathan, has lost $ 1 billion it had invested in its Simandou project in Guinea.
The Simandou write-down has contributed to the net loss of $866 million which Rio has posted. However, Rio Tinto says it will continue with the project in spite of the setback.
In a statement it released, the Guinea government expressed support of the project. “It (the project) is an essential opportunity for investors and we are fully confident in its success.”
Simandou has over two billion tonnes of reserves and some of the highest grades in the industry (66% – 68% Fe which attracts premium pricing) has a back-of-the-envelope calculation value of more than $80 billion at today’s prices. At full production, Rio’s Simandou concession would export up to 100 million tonnes per year – that’s a third of Rio’s total capacity at the moment – and would catapult Rio past Vale as world number one.