It is reported that RIO Tinto major shareholder, Chinalco has delayed the signing of a deal to enter the Simandou iron ore project in Guinea and has requested an engineering study on the USD 10 billion project before it joins.

Chinalco Hong Kong listed subsidiary Chalco said it wanted to extend until mid-March next year the period for satisfying conditions precedent in a binding development agreement on Simandou that was signed in July last year. Under the deal, through which Chalco will pay USD 1.3 billion to gain a 47% stake in the Simandou joint venture with Rio and the conditions should have been satisfied by now.

Chalco did not say what conditions still needed to be fulfilled. It said a number of amendments to the deal were made including the addition of the delivery of a preliminary engineering assessment report for the Simandou project by Rio Tinto.

It is believed the delays are due to regulatory processes in China. The significance of Chalco calling for an engineering assessment is not known. The deal will also be changed to say that the USD 700 million settlement fees Rio paid in April so the Guinea government would not strip it of the project will be the first call on Chalco USD 1.3 billion payment.

Iron ore from Simandou will initially have to be trucked more than 600km to meet a target of first ore by mid-2015.

(Sourced from www.theaustralian.com.au)