Mauritania says Glencore set to sign infrastructure deal

(Recasts with comments from state mining firm, adds quote and dateline)

By Laurent Prieur

NOUAKCHOTT, March 31 (Reuters) - Mauritania is set to sign a contract with Glencore Xstrata Plc (Other OTC: GLCNF - news) giving access to the west African country's rail and port facilities, the state mining firm said on Monday, as Glencore expands its iron ore operations.

Glencore said in its 2013 annual report it was assessing two iron ore assets in the country, Askaf and El Aouj, which it said collectively have the potential to produce at least 22.5 million tonnes per year.

But to exploit those resources it needs to be able to use Mauritania's infrastructure and negotiations over the access deal have been underway since at least the end of 2012.

People familiar with the talks told the Financial Times the state mining company SNIM (Société Nationale Industrielle et Minière) had initially asked too high a price for access to its railway for the next 20 to 25 years, before settling on a deal valued at $1 billion.

Samba Demba Barry, communications head at SNIM, declined to confirm the amount, but said a deal covering the use of rail and port facilities at Nouadhibou was expected to be signed in the next few days.

Glencore Xstrata declined to comment.

Mauritania, which straddles black and Arab Africa, has reserves of iron ore, copper and gold. Mining (LSE: MIR.L - news) companies Kinross Gold Corp and First Quantum are already active there.

The FT also said Glencore is close to reaching a deal for a contractor to carry out construction work for its planned operations in the country, but was still in negotiations with the Mauritanian government about the tax terms of the operation. (Additional reporting by Aashika Jain in Bangalore; Writing by Emma Farge; Editing by Sandra Maler and David Holmes)