OREANDA-NEWS. December 20, 2012. Brazilian miner Vale is still interested in developing the Simandou project in Guinea but has put it on hold until it receives more clarity from the Guinean government about the mining code that will be applied and the logistic plans that the government has in mind for the project. "We are still interested in being in Guinea but we need clarity" from the Guinean government about the terms of investment before any proposal can be approved by the board, CEO Murilo Ferreira told journalists at Vale's investor day in London. The company put the development of the Simandou blocs 1 and 2 on hold this spring and the development of its Zogota mine on hold in the autumn.

Mr. Ferreira noted that the Guinean government has indicated that it now wants iron ore from Simandou 1 and 2 blocs to be transported circuitously to a port in Guinea rather than straight through Liberia, as had originally been planned. The longer route to port could potentially change the economics of the project, which is estimated to cost USD 10 billion to develop.

The company is also seeking specifics on kind of mining code and taxation that will be applied to the project, a company spokeswoman said.

Vale, the world's largest iron ore miner, alongside partner BSG Resources were planning to invest in the high-quality, iron ore project in stages. The first stage of the project was due to start producing 2 million tons of iron ore from the smaller USD 1.26 billion Zogota mine this year, but the project was put on hold amid conflicts at an employees' camp and uncertainties about a mining-royalties law in the West African nation.

The Guinean government is in the process of reviewing the terms for the project, which is located in the southeastern Simandou region of Guinea, with a view to potentially increasing its stake and applying higher royalties.

The government's review, however, has taken a backseat to other more pressing matters that involve resolving political and economic issues, including those with the International Monetary Fund, Mr. Ferreira said.

"We are not demanding anything from the Guinean government," Mr. Ferreira said. "We have profound respect for the agenda of the Guinean government and we have certainty that once these issues are resolved, they will continue with their studies" on Simandou, he noted.

Vale agreed in 2010 with BSG Resources, the mining division of Israeli diamond billionaire Beny Steinmetz, to pay USD 2.5 billion for 51% stake in BSG's Guinean unit that owns Zogota, Simandou blocs 1 and 2 and exploration permits in Northern part of Simandou. The Brazilian miner, which at the time was run by CEO Roger Agnelli, agreed to pay USD 500 million immediately and USD 2 billion in phases depending on certain milestones being achieved.

Mr. Ferreira, who wasn't at the company at the time, said those additional payments haven't been made because the milestones hadn't been reached. Mr. Ferreira said the decision to put the Guinean projects on hold wasn't related to concerns about volatile spot iron ore prices but rather a reflection of the uncertainties surrounding the project itself.