May 30, 2017

Chinese company buys the world’s biggest mining project

Chinalco, a Chinese company, is buying off Rio Tinto’s stake in Simandou South iron ore project in Guinea.

Melbourne-based Rio Tinto and Chinalco are joint shareholders of Simandou mine.

In a statement it has released, Rio Tinto, the world’s second largest producer of iron ore, has revealed that the deal is worth between $1.1 billion and $1.3 billion, which will be payable as soon as commercial production at Simandou and mainly based on output.

In a desperate bid to sustain the project, Rio has overstretched its finances.  In February this year, before deciding to shelve the project, the company is said to have written down almost $1.1 billion.

Rio’s exit in Simandou follows the International Finance Corporation sale of its 4.6% stake.

Currently, Rio owns 46.6% of Simandou south, Chinalco’s stake is 41.3% and the Guinea government holds 7.5%.

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