Rio Tinto is slightly more optimistic over its stalled Simandou iron ore project after the Guinea government in Africa showed willingness towards the venture.
The government said over the weekend it is prepared for a third party to construct the railway for the huge project, with a price tag of $US20 billion ($20.88 billion).
Various factors have delayed the Simandou iron ore project. The local government was pressing for bigger stakes in the project over the years.
That, coupled with resource nationalism and negotiations around who will foot the cost for infrastructure, has contributed to the stalling of the project.
But Guinea has been struggling to acquire financing for it share, and Rio has been looking at cost cutting measures and divestment plans.
But there is now renewed hope after Guinean President Alpha Conde’s comments, according to the SMH.
“What’s important to us is that the railway is built so we’re open t o any solution that allows the construction of the railway,” Conde said.
“We are open to a partner financing 51 per cent or all of it; that depends on the agreement we have with Rio Tinto.”
A Guinean minister said only last week Rio would not get be able to start production on the mine by 2015 as intended.
Rio’s chief executive Sam Walsh was part of a summit that included British Prime Minister David Cameron on Saturday.
Walsh endorsed pro-growth policies in the developing world, and supported new transparency laws for the resources sector that were recently passed by the European Union.
The laws mean mining, oil and gas companies will be obliged to publish what they pay to governments on a ‘project by project’ basis.
Walsh, however, faces stiff opposition from Rio and several other companies including Xstrata, BHP Billiton, Total BP and Anglo America opposing the ‘project-by-project’ reporting, saying it would be ineffective.