Rio operations in Guinea threatened

LONDON/MELBORNE -
Guinea has threatened to suspend Rio Tinto operations if the miner does not exit this week from disputed iron ore concessions, according to a letter from the mining minister seen by Reuters.

Guinea last year gave the rights to blocs 1 and 2 of the huge Simandou concession to BSGR, a firm owned by an Israeli diamond trader, and recently demanded that Rio agree to the government decision to leave it with blocs 3 and 4. A letter, signed by an official on behalf of the minister and dated July 14, said: ‘If the equipment is not withdrawn within a maximum period of one week, your business will be suspended until the final implementation of the decision.’ Rio Tinto was not immediately available to comment on the letter but said in an emailed statement that it remained confident of its rights to the full concession.’We remain optimistic about the findings of any fully independent review of the Simandou issue,’ Rio said.Rio, the world’s second biggest iron ore producer, has spent more than US$450 million on exploration at Simandou and considers it the world’s largest undeveloped iron ore deposit.Another letter from Guinea’s mines and energy minister Mahmoud Thiam dated June 26 criticised Rio for delays in developing the US$6 billion Simandou project and said the global miner was destabilising the West African country.’We regret to observe that Rio Tinto seems to ignore this sovereign decision from our government with a doggedness verging on defiance of the authority of the state,’ said the letter, which was also seen by Reuters.RIO SEEKS CLARIFICATIONIn the June letter, the minister accused Rio of a campaign against the government, saying ‘such activities come dangerously close to destabilising civil peace and weakening our socio-economic balance.’Rio said it still wants to develop the project and continues to work closely with the Guinean government to clarify the issues surrounding the matter.’Rio Tinto has in all its actions, public statements and letters to the government of Guinea indicated its desire to conduct good faith discussions,’ the firm said, adding that it was also helping build airports, roads, schools and hospitals.Guinea criticised Rio, which has cut back on developing new projects during the global downturn, for not moving quickly to bring the Simandou project into production.’The fact that a company as important as yours has not been able to develop one of the world’s richest and most coveted deposits raises some questions as to its real intentions,’ the June letter said.Beny Steinmetz Group Resources (BSGR) has been active in Guinea since 2006 and discovered the Zogata iron ore deposit before the government awarded it part of Rio’s Simandou concession in December 2008.Both Zogata and the Simandou blocs 1 and 2 are in the southeast of the country.The row with Guinea comes on top of Rio’s confrontation with China over the arrest of four employees detention on suspicion of spying during iron ore contract negotiations.- Nampa-Reuters