Vale Lampoons Guinean Government for Lack of Clarity

Reuters reported that while Vale SA (NYSE:VALE) is interested in working in Guinea, which holds the largest untapped deposit of iron ore in the world, it was forced to stop work at its two projects there due to the Guinean government’s failure to provide it with clear guidelines. One particular point of contention has been the export route that mined ore will take.

As quoted in the market news:

“We are still interested in being in Guinea. But we need clarity. We have shareholders, and we need to be transparent with them,” Vale Chief Executive Murilo Ferreira said.

“The issue is in the hands of the Guinean government … They set the rules; they tell us what rules govern a project, and they have not communicated the rules for this project yet.”

Unlike Rio Tinto, which is developing the southern part of Simandou and will export through Guinea, Vale had hoped to export through neighbouring Liberia – a shorter and less expensive route but a less popular option with the government.

Ferreira said the government had informed Vale and BSGR that the export route would be through Guinea, scrapping an earlier concession which they obtained in exchange for agreeing to build an almost 700 km rail line. That would drive up risks and project costs already estimated at $10 billion.

Click here to read the full Reuters report.