The World Bank’s International Finance Corporation is leaving the project, according to reports, having exercised a right to ask Rio Tinto (LN:RIO) and partner Chinalco to buy out its 4.6% holding in the joint venture.
“We confirm that the IFC has exercised a put option, which it has held since 2006, to require Rio Tinto and Chinalco to buy their stake in Simfer,” Rio said in a statement.
Under the agreement, the IFC will also recoup costs, so could take US$200 million out of the move, according to Bloomberg.
Rio CEO Jean-Sebastien Jacques said in July the project was on hold.
“We did deliver the [bankable feasibility study] to the government as per the agreement a few weeks ago and we’ve been very clear that in the current market environment we don’t see a way forward in relation to Simandou,” he told The Times.
The collapsed iron ore price is only the latest roadblock for the project, which would require a $20 billion investment to start pulling the some 2 billion tonnes of iron ore out of the ground.
In 2008, the former Guinean dictator Lansana Conté transferred the northern section of the project to Israeli tycoon Beny Steinmetz and his mining offshoot, Beny Steinmetz Group Resources.
In 2010, Vale paid Steinmetz $500 million for a 51%-stake, but after Conté’s death, a new government cancelled BSGR’s rights and an inquiry claimed BSGR had paid bribes to the wife of the dictator to help gain sway over the property.
These charges have been strenuously denied by BSGR which, in turn, accused the Guinean government of illegal expropriation of its assets.