SYDNEY (AFP) — Poverty-stricken Guinea rather than Rio Tinto will be the big loser if the west African country cancels a major iron ore concession, an anti-corruption watchdog said Sunday.
The Anglo-Australian mining giant said this weekend that Guinea's President Lansana Conte appeared to have rescinded the Simandou concession, which analysts say could become one of the world's major sources of iron ore.
An official with Transparency International, which campaigns to stop officially sanctioned corruption in developing countries, said the big losers would be Guinea's impoverished people if the project was cancelled.
"They would miss out on all the benefits, and they have got little else to sell to the international community given the collapse of the Doha round last week," Greg Thompson told AFP.
"The company will have to go elsewhere. All companies have to secure their long-term future and these are the green fields they are exploiting at the moment."
Guinea is one of the world's poorest countries and is at the heart of a region beset by civil conflict, which has devastated its neighbours Liberia, Sierra Leone and Ivory Coast over the past two decades.
The Simandou concession was estimated to contain resources of 2.25 billion tonnes of iron ore and was expected to have an initial production rate of 70 million tonnes per year.
Simandou, which experts say could one day rival Australia's Pilbara and Brazil, has been a key factor in the company's plan to lift iron ore output to 600 million tonnes per year.
In a statement issued at the weekend, however, Rio Tinto said it received correspondence from President Conte "purporting to rescind the Simandou Mining Concession."
Rio Tinto said it believed it had conformed with Guinean law and would be considering the situation.
"In conjunction with its partner in the project, International Finance Corporation, Rio Tinto is currently studying the issues raised in the correspondence," the company statement said.
"Rio Tinto remains confident that its arrangements are in all respects in conformity with Guinean laws and that it has complied with its obligations."
Thompson, of Transparency International, said both Rio Tinto and its would-be buyer, BHP Billiton, had made major efforts in recent years to improve their image with communities affected by their mining.
Production at Simandou was expected to start in 2013. Rio Tinto said it was discussing the outstanding issues with the Guinean government.
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