Rio Tinto iron ore licence in Guinea at risk
Thursday 12 June 2008
One of Rio Tinto's top iron ore concessions is under threat after the Guinea government revealed it was reviewing the $6bn project in Simandou, stating concerns over its legality.
One broker said the move could "give wind to the sails" of BHP Billiton, the arch-rival that is trying to take it over in a $164bn hostile deal.
Shares in Rio dropped 3.6 per cent at one stage yesterday after the company confirmed to the market that it had received a letter from the President's office in Guinea. It said the office's legal team was reviewing its iron ore concession in Simandou, questioning whether it conformed with Guinea's mining code. No timetable was given for the review.
Rio said in a statement it was assessing the issues with its partner in the project, the International Finance Corporation. It said it was "confident that its convention and concession are in all respects in conformity with Guinean laws in their current form". Rio added it had started talks with officials to resolve the "misinterpretation".
The group announced two weeks ago that it would start production on the Simandou site in 2013. The chief executive, Tom Albanese, called it one of the "top" undeveloped sites in the world.
A source close to Rio said work had not stopped on preparations to launch the operation, and is expecting the results of a feasibility study at the end of the year.
Analysts at Liberum Capital said the news was disappointing despite the project being some way off development. This may give "wind to the sails" of BHP Billiton, who have pointed to the long lead time of Rio Tinto's projects in the relative valuations, Liberum added.
BHP first approached Rio in November last year, but it was rejected as "significantly" undervaluing the group. BHP was in Brussels last week to convince the European Commission that a merger would not damage competition.
- 1 Autism 'caused by genetics', study suggests
- 2 What happens to your body when you give up sugar?
- 3 Why you should never make assumptions about people with autism
- 4 Tourist films plane's descent just metres above packed Caribbean beach
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
Tourist films plane's descent just metres above packed Caribbean beach
Bali nine: Welcome to 'Execution Island' – the Indonesian holiday resort where foreigners are sent to die
How Homer Simpson discovered the Higgs boson over a decade before scientists
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Harrison Ford plane crash: Star Wars actor 'seriously injured' after light aircraft crash lands
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Elif Shafak: Turkish author warns against rise of British nationalism
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
iJobs Money & Business
£13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...