Chalco Hong Kong Ltd, has agreed to sell its equity stake in Chalco Iron Ore Holding to Chinalco Overseas Holdings to ease funding pressure from the joint venture Simandou iron ore project in Guinea, Chalco said in a filing to the Hong Kong Stock Exchange late Friday.
"The Simandou project involves big investment with a long construction period... placing funding pressure, so the company has to sell the interest to cut capital expenditure, and reduce interest expenses," Chalco said.
Located in Guinea, West Africa, the Simandou project is an open-pit iron mine, with current resources of No. 3 and No. 4 ore bodies reaching 2.718 billion mt with an average grade of 65.5% Fe.
Concession licence holder and project operator Simfer is 50.35% owned by Rio Tinto, 44.65% by Chalco and 5% by the International Finance Corporation. According to Chalco, output from the mine is estimated to reach 100 million mt/year by 2023.
Under the agreement signed on October 18, Chalco Hong Kong will sell its 65% stake in Chalco Iron Ore -- its investing entity for the Simandou project -- to Chinalco Overseas Holdings for $2.07 billion.
Chalco Hong Kong is the listed subsidiary of Aluminum Corporation of China Ltd., or Chalco, which in turn is the wholly owned subsidiary of Aluminum Corporation of China, better known as Chinalco.
The Guinean government owns the other 35% stake in Chalco Iron Ore.
Chalco will also transfer bank loans of $438.75 million related to the Simandou project to Chinalco Overseas.
