UPDATE 1-Fortescue, SMB-Winning go head-to-head to develop Guinea's Simandou iron ore

(Adds details on tender, background)

By Saliou Samb

CONAKRY, Oct 4 (Reuters) - Australian miner Fortescue and Guinea's biggest bauxite exporter SMB-Winning are the last two companies in the running for the rights to develop blocks 1 and 2 of Guinea's Simandou iron ore deposit, three sources told Reuters on Friday.

A Guinea government commission in charge of the international tender for Simandou blocks 1 and 2 should come to a final decision in around a month, the sources close to the commission said.

Guinea has struggled for decades to develop its Simandou iron ore deposit which is among the world's biggest and contains billions of tonnes of high-grade ore.

Simandou has been mired in protracted legal disputes, and the high cost of infrastructure to transport the ore out of the remote southeastern corner of Guinea has also put a dampener on potential developers' enthusiasm.

The government insists that ore from Simandou must be exported through Guinea, requiring the developer to build a 650 kilometre railway to Guinea's coast as well as a deep-water port, taking the overall cost of developing the deposit to around $23 billion.

The consortium of Societe Miniere de Boke (SMB) and Singapore's Winning, which is Guinea's biggest bauxite exporter, confirmed it had submitted an offer.

Brazil's Vale had also purchased access to the project data, but did not submit an offer, the sources said.

Fortescue was not immediately available to comment, and Vale declined to comment.

Simandou blocks 1 & 2 became available after a settlement between Guinea's government and billionaire Beny Steinmetz's BSG Resources in February.

Blocks 3 and 4 are owned by a joint venture of Rio Tinto, China Aluminium Corp (Chinalco), and the Guinean government. (Reporting by Saliou Samb in Conakry, Additional Reporting by Christian Plumb in Sao Paulo, Writing by Helen Reid in Johannesburg, Editing by Chris Reese and Grant McCool)