- Rio Tinto has lost control rights over the mining of more than US $10 billion iron-ore in Guinea after the West African country rescinded its license.
Simandou, one of the world's largest underdeveloped iron-ore deposits, has been one of Rio's most important iron-ore projects capable of generating over US $10 billion a year.
The world's second largest miner said it was prepared to fight Guinea's decision, which has already started leaving its marks on the company's Australian-listed shares that are trading 3% lower on Monday.
The decision has also raised fears of a worsening economic environment in Europe and the United States. The price of iron ore has gone up by 96% this year, amid huge steel demand from China and other Asian nations.
Located in the highlands of Guinea, Rio plans to invest an estimated US $10 billion to exploit the more than two billion tonnes of iron ore. It has already spent US $300 million in Guinea as well as moved some of its most experienced mining engineers to there to develop the project.
Guinean government's decision was based on fears that the company would be a monopoly in the Simandou region.
However, Rio said its resource would account for less than 20% of the iron ore in the region.
Analysts said the Guinean government might have received a lucrative offer from China.
Rio's Iron Ore Division head, Sam Walsh said, "we will take this very seriously and fight for its rights. This is all very confusing."
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