Rio Tinto’s agreement to sell its stake in the Simandou iron ore project in Guinea, west Africa, to Chinalco has lapsed.
The company broke the news in a brief statement to the Australian Securities Exchange (ASX) and London Stock Exchange (LSE) this morning.
Rio Tinto and Chinese-owned Chinalco signed an agreement on October 28, 2016 for the purchase of Rio Tinto’s 45.05 per cent stake in the project, a deal estimated at the time to be worth between $1.1–1.3 billion.
The deal would have seen Chinalco become the majority owner of Simandou, increasing its stake from 39.95 per cent to 85 per cent. The Government of Guinea also holds a 15 per cent stake in the project.
In November 2016, a few weeks after the signing, the project became embroiled in controversy when two former high-level employees were found to have paid $US10.5 million ($14.8 million) to French banker François Polge de Combret — who shares a personal relationship with Guinea’s president Alpha Condé — for consultancy services related to the project.
Former energy and minerals chief executive Alan Davis was suspended and regulatory affairs group executive Debra Valentine stepped down after Rio conducted an internal investigation that discovered emails from 2011 containing information related to the consultant.
Rio Tinto announced in today’s report that it and Chinalco would “continue to work with the Government of Guinea to explore other options to realise value from the world-class Simandou iron ore deposit”.