LONDON/CAPE TOWN: Rio Tinto shrugged off concerns on Wednesday that its sale of Guinea's Simandou project to Chinalco had stalled after an investigation into payments to a consultant who helped it win rights to the huge iron ore deposit.
Rio signed a preliminary deal in late October to sell its stake in Simandou, the world's largest untapped iron ore reserves.
But the following month, the world's second-largest miner axed two of its top 10 executives amid a probe over $10.5 million in payments to a consultant providing advisory services on the Simandou project.
Rio has alerted US, British and Australian regulators about the payments, but there is no suggestion that the officials or consultant acted illegally.
China, the world's largest iron ore consumer, provides an obvious market for Simandou, but industry sources have questioned whether China would ever develop the project.
"Why do you say stalled?," Rio Tinto Chief Executive Jean-Sebastien Jacques said during a results conference call in response to a question. "The two (negotiating) teams are working as we speak.
The Rio team was in Beijing last week again and we'll be in China next week again." Jacques declined to say if he was confident that Rio and Chinalco would finalise the deal within the original six-month timeframe. "We are progressing, it's a complicated process, it takes some time. We're just moving as quickly as we can," he said.
If the deal to sell its 46.6 percent stake in Simandou to Chinalco went ahead, Rio Tinto would receive payments of between $1.1 billion and $1.3 billion based on the timing of the project's development, it said in October. Rio pleased investors on Wednesday when it beat full-year profit forecasts and announced a bigger-than-expected annual dividend, but it also warned that the investigation "could ultimately expose the group to material financial cost".
"At this point in time it's early days," Jacques said. "We don't know if there will be any provision but it was important due to disclosure requirements to put out that there could be something."
Comments
Comments are closed for this article.