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Vol 53 No 4

Published 17th February 2012


The gamble for Simandou

Brazilian mining conglomerate Vale is keeping its operations under close review, after threatening to sell its investments in Guinea last month. After tough talks with its minority partner and President Alpha Condé’s government, Vale has for now pulled back from the brink. Yet it still has grave misgivings about the terms and conditions of a project in which it may have to invest as much as US$10 billion for a stake in one of the world’s richest iron-ore mines.

The financial firm JP Morgan estimates that Simandou’s Vale-controlled blocks can produce 50 mn. tonnes of ore annually by 2020. That compares favourably with the output of South Africa’s Kumba Iron Ore, the continent’s biggest producer. International financier George Soros has a special role in the drama. He advised Condé’s government on a revised mining code with better benefits for the state, including a 15% free-carried interest in mining projects and an option to buy a further 20% stake at market prices.

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