Row with president threatens Rio Tinto Guinea project

Rio Tinto confirmed yesterday that the Guinean government had threatened to strip the company of its stake in a huge iron ore project in the West African country. The dispute centres on the miner's failure to acknowledge an earlier decision to remove part of the project from Rio's control.

The Anglo-Australian company said it had received a letter from the outgoing President of Guinea, General Sekouba Konate, in relation to a 2008 decision to remove two blocks of the huge Simandou project from Rio's control. "If you persist in not respecting the decisions legally taken by the public authorities of our country, we will regrettably have to apply the full force of the law," General Konate said. The decision followed a protest that Rio Tinto had taken too long to develop the site.

Rio still has the right to develop two other blocks in the project. In a statement yesterday, the company rejected both the letter and the 2008 decision. "Rio Tinto confirms we have received the letter and will be responding to the government in due course. We have always maintained our firm rights to the entire mining concession that was granted based on the 2003 Mining Convention between Rio Tinto and the government of Guinea.

"We have invested over $600m (£402m) in Simandou and in Guinea. Pre-feasibility studies are complete and Rio Tinto is keen to move the development forward quickly. The proposed joint venture with Chinalco and partnership with the IFC makes us an extremely strong development team."

The row with Guinea's military rulers is the third dispute with a national government in the past year. Last July, the company said that four employees arrested in China on bribery and espionage charges were innocent, before later describing their guilt as "beyond doubt", and the violation of Chinese law as "deplorable behaviour".

Rio Tinto is also at the forefront of the mining industry's campaign to persuade the Australian government to amend its planned 40 per cent profits tax on the resources industry from 2012, describing the levy as "apparently arbitrary".

The group is in the midst of trying to convince the worldwide competition authorities to approve its proposed $116bn iron ore joint venture with BHP Billiton in Western Australia.