By Saliou Samb
CONAKRY (Reuters) - Global miner Rio Tinto's (RIO.AX)(RIO.L) outline deal to sell its stake in the Simandou iron ore project in Guinea has lapsed after years of negotiations failed to produce an agreement with Aluminum Corp of China (Chinalco)<601600.SS>.
Simandou is one of the world's biggest iron deposits, containing billions of tonnes of high-grade ore under the remote forested hills of Simandou, but development has been complicated by its location far from the West African nation's coast.
Rio announced a non-binding deal to sell its stake in October 2016. But as the talks dragged on, sources said one issue was that Chinalco wanted to take over the whole of the project, not only the two blocks in which Rio has a share.
"Rio Tinto and Chinalco ... will continue to work with the government of Guinea to explore other options to realise value from the world-class Simandou iron ore deposit," the miner said in a statement.
A spokesman said it could not comment further.
Guinea Mines Minister Abdoulaye Magassouba told Reuters by telephone that "all options are open, including (other) Chinese investors" after the lapsing of the deal two years after the non-binding agreement was announced.
"Our goal remains the effective revival of the project as soon as possible and we are continuing to work towards this," he said.
Rio and Chinalco own 45.05 percent and 39.95 percent of the project respectively, with the government of Guinea holding a 15 percent stake.
Chinalco representatives were not available for comment.
Apart from the Chinalco gaining access to only two of the four Simandou blocks, a major obstacle to developing the reserves is the enormous $23 billion cost of the infrastructure needed for transportation to Guinea's coast. The government has ruled out shipping ore via closer ports in neighbouring Liberia.
Last year Rio's chief financial officer said the deal was complex because of the involvement of three parties, though Magassouba in July expressed confidence that a deal would be done.
After a recovery from the commodity crash of 2015-16, the mining sector has been grappling this year with the impact of trade tensions between the United States and China, the world's top commodities consumer.
Rio Tinto announced in September that a separate planned sale of assets -- including an aluminium plant in Iceland -- to Norsk Hydro (NHY.OL) was off, but sources said it was seeking another buyer as it continued efforts to sell non-core assets.
Shares in Rio Tinto, which are down about 5 percent this year, rallied 1.6 percent on Monday as part of a wider market recovery.
(Additional reporting by Rushil Dutta in Bengaluru and Barbara Lewis in London; Editing by Richard Pullin, Joseph Radford and David Goodman)