Rio Tinto pushes ahead with Guinea mega mine despite writedown

DAKAR, Feb 11 (Reuters) - Rio Tinto (Other OTC: RTPPF - news) will seek financing for its massive Simandou iron ore project in Guinea, despite writing down its value due to low commodity prices and funding uncertainties.

The world's No. 2 miner on Thursday reported a net loss of $866 million last year, hammered in large part by a $1.1 billion writedown of the $20 billion Simandou project, considered the world's biggest untapped iron ore deposit.

But Rio Tinto, investors and advisers said this would not impede the hunt for funding or the timing of the project, which could have a major impact on Guinea's flagging economy.

"This is just an accounting adjustment," said Rio Tinto's Alan Davies, president of the Simandou project. "Today's decision has no impact on the timing of the project."

Simandou comprises an iron ore mine in central Guinea, a 650-kilometer (404-mile) railway and a deepwater port on the West African country's Atlantic Coast. Its development already involves a number of international investors and developers.

At full production, expected at around 100 million tonnes of iron ore a year, Rio said the project will generate about $7.5 billion in revenues, according to a 2014 report. It would add $5.6 billion to Guinea's GDP, Rio said, making Guinea the fastest growing economy in the world.

Guinean President Alpha Conde is relying on the project as a boost for Guinea's finances.

"The value of Simandou makes it an essential opportunity for investors," Guinea's ministry of mines and geology said in a statement. "The Guinean Government is fully confident in the success of the project."

Everything now depends on funding for the project, whose economics are less certain now that commodity prices are in a trough. Iron ore prices are near multi-year lows, knocked by waning demand in China and a market glut.

Rio said it will present a feasibility study in May, outlining the cost of the project and investors will then make a decision. Until then, the timing of the venture is unclear.

"As far as I am aware, the project continues and the accounting should not have anything to do with the project," said Stephane Brabant, lawyer at Herbert Smith Freehills who has advised on the project. (Reporting by Edward McAllister; Additional reporting by Saliou Samb; Editing by Alexander Smith)