Mining Magazine > Panorama > Vale buys Guinean assets

Panorama

Bloomberg has reported that Vale SA, the world’s largest iron ore producer, has agreed to pay US$2.5 billion for deposits in Guinea, including assets the West African nation confiscated from Rio Tinto Group over a development dispute.

Vale will pay US$500 million up front for 51% of BSG Resources Ltd and the remainder as the projects meet targets. The deal includes the Simandou North Blocks 1 and 2, previously owned by Rio Tinto, and the Zogota project in Simandou South. Rio Tinto controlled the entire Simandou deposit, including blocks 1 and 2, until it was ordered by the government in December 2008 to hand over the northern half to BSG Resources Ltd.

Vale produced 237.9Mt of iron ore in 2009 and expects output to rise to around 450Mt/y by 2014. In a statement made by the company last year, CEO Roger Agnelli said: “Simandou Blocks 1 and 2 and Zogota are among the best undeveloped iron-ore deposits in the world. They are high quality and have the development potential for a large-scale and long-term project with low operating and investment costs.”

BSG plans to start producing from blocks 1 and 2 in 2013, with output ramping up to 100Mt/y. Zogota, set to start in 2012, will have the capacity to produce 25Mt/y of ore.