LONDON (Reuters) - Major miner Rio Tinto (AX:RIO) (L:RIO) announced an agreement on Friday to sell its stake in a project to develop the world's biggest untapped iron ore reserves in Guinea to Chinalco (HK:3668).
Rio has a 46.6 percent stake in the Simandou project, while Chinalco, a state-owned Chinese metals producer, has 41.3 percent and the Guinea government owns 7.5 percent.
If the deal goes ahead, Rio Tinto will receive payments of $1.1 billion (£906.02 million) to $1.3 billion (£1.07 billion) based on the timing of the development of the project, it said in a statement, adding the aim was to seal a final deal in less than six months.
Although the project holds huge potential, Rio has voiced its frustration over drumming up financing.
In August, Rio CEO Jean-Sebastien Jacques said there had been no progress on finding infrastructure funding for the project and in October the International Finance Corporation (IFC), an arm of the World Bank, said it was exiting the project.
The West African country is counting on the project to spur economic growth after Guinea was hit by a crippling Ebola epidemic that officially ended in June.
When fully operational, Simandou has the potential to double Guinea’s GDP, the project partners have said, while China, the world's largest iron ore consumer provides an obvious market.
