Vale Acquires Guinea Iron Ore Interest
The properties held by the Vale/BSGR joint venture are Simandou South (Zogota) and iron ore exploration permits for Simandou North and Simandou Blocks 1 and 2. In an all-cash transaction, Vale is paying BSGR $500 million immediately and will pay the remaining $2 billion on a phased basis upon achievement of specific project milestones. Vale’s announcement described Simandou Blocks 1 and 2 and Zogota as “one of the world’s best undeveloped sources of high-grade iron ore, with potential to support the development of a large-scale, long-lived project, with low capex and operating costs.”
The Vale/BSGR joint venture will initially implement the Zogota project, while conducting a feasibility study for Blocks 1 and 2. First production is targeted for 2012 at a rate of 10 million to 15 million mt/y, increasing to 50 million mt/y by 2014.
Vale will be responsible for management control and marketing of the joint venture and will have exclusive rights to the off-take of all iron ore produced.