The World Bank's International Finance Corp. is exiting Rio Tinto's Simandou iron ore project in Guinea after a decade of being a partner, the latest setback in a string of issues hampering the development of the US$20 billion project, Bloomberg News wrote Oct. 10, citing an email from the company.
Owning a 4.6% stake in Simandou, the IFC exercised a put option that allows it to back out of the project and recover costs. According to a person familiar with the matter, the remaining project partners are now required to buy out the IFC for about US$200 million.
Simandou is currently 46.6% owned by Rio Tinto, 41.3% by Aluminum Corp. of China Ltd. and 7.5% by the Guinean government, the report added.
Rio Tinto shelved its plans to develop the project in July due to its enormous costs and the ongoing iron ore supply glut. Prior to its decision to defer the project, the company has also faced several issues that delayed Simandou's development, including an Ebola outbreak, difficulties in in finding funding partners and legal battles over the project's ownership.