Rio Tinto Backs Out From $1B Portugal Iron Ore Project

Rio Tinto has backed out from a planned $1-billion iron ore project in Portugal to focus on much bigger and potentially profit-yielding development projects, Reuters News reported.

Rio Tinto, in talks with the government of Portugal, had signified it is no longer that interested to pursue the project, Reuters News said, quoting unidentified sources.

"The Moncorvo mines project will go ahead, but most likely without Rio Tinto," said one of the sources. "Rio Tinto is choosing to give up smaller projects and Moncorvo should be one of them."

The global mining giant had been earlier interested in Moncorvo, located in northern Portugal, which holds one of Europe's largest iron ore deposits.

But falling global commodity prices, rising operational costs, as well as shareholder pressure to refund capital prompted Rio Tinto to reexamine its plans, opting to focus on its Western Australia and Guinea iron ore project and the Mongolian Oyu Tolgoi copper project.

Regardless of Rio Tinto backing out of the project, the government of Portugal remained confident there are other foreign investors interested in the project.

"The potential is still there and we have others interested: big mining companies from Brazil, China, Canada and South Korea," the source said.

Portugal's mining resources range from iron ore to gold, silver and tungsten.

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