Chinalco Shares Suspended Amid Rio Tinto Deal Talk Concerning Simandou, Guinea Iron Ore Project
By By Leslie Hook in Hong Kong and William MacNamara in London
Published: July 28 2010 14:27 | Last updated: July 28 2010 14:27
Aluminum Corp of China suspended its shares on Wednesday amid expectations of a deal with Rio Tinto, the Anglo-Australian miner.
Rio and the Chinese state-owned miner, also called Chinalco and Chalco, will hold a signing ceremony on Thursday at 3:30pm at the Great Hall of the People, according to an invitation sent to the Financial Times office in Beijing. Rio declined to comment.
Although early speculation centred on Mongolia, where Rio is helping to develop a vast copper deposit, two people close to the company suggested that the agreement would involve Simandou, a rich iron ore project in Guinea.
In March the two groups announced a non-binding agreement for the Chinese company to acquire a 44.65 per cent stake in the project for $1.35bn.
Simandou has been a troubled project for Rio, leading some to speculate that it may sell out its stake entirely to the Chinese group, a state champion that has been mandated to acquire resources abroad. Simandou has among the largest untapped iron ore deposits in the world, with some 2.25bn tonnes of ore.
Rio has held the exploration licence to Simandou since 1998 but the Guinea government stripped it of one half of the asset 10 years later, citing Rio’s tardiness in developing the block. Half of the asset was awarded to Beny Steinmetz’s group BSG Resources, which was recently acquired by Vale, the Brazilian iron ore giant. The government of Guinea warned Rio in June that it might strip Rio of another Simandou block.
The Chinese group’s decision to take a stake in the mine was seen as a sign that Rio’s relationship with China was improving after a difficult period. Rio’s shareholders last year rejected a proposal from Chinalco worth about $19.5bn, causing the Chinese company to lose face – although the Chinese group is Rio’s biggest shareholder. Separately, four former Rio Tinto employees in China were arrested last year and eventually convicted of bribery and stealing commercial secrets.
Several officials at the Chinese group declined to comment on the share suspension when contacted by the FT. “It’s not convenient for us to disclose that right now,” one of them said.
Employees and government officials gathered in Beijing this week for the company’s 2010 mid-year work meeting, according to a statement on the company’s website.