Brazilian mining giant Vale SA (VALE, VALE5.BR) has signed an infrastructure development agreement with the Liberian government to build infrastructure that will transport iron ore from Guinea to a planned port on the coast of Liberia, a senior company executive said Wednesday.

Vale is planning to invest more than $5 billion to develop the Simandou iron ore project in Guinea, one of the world's highest-quality iron ore deposits.

The company plans to build a trans-Liberian railroad to transport the steel making raw ingredient from the Simandou project in Guinea to a port which it also plans to build on the coast of Liberia, Eduardo Ledsham, executive officer of Exploration, Energy and Projects, said at Vale's investor day in London.

Ledsham said the railway line will be able to transport up to 50 million metric tons of iron ore annually to a port which will be able to load the same amount each year. The railroad should be completed sometime in 2013, shortly after the first ore is produced from the Simandou project, a senior executive involved in the project said.

The Simandou project will be developed in two parts: The Zogota project and blocks 1 and 2, Ledsham said. The Zogota project in southern Guinea will start producing iron ore by the end of 2012 at a rate of 2 million tons annually. It will then ramp up to a maximum 15 million tons by 2014.

From 2016 to 2020, Blocks 1 and 2 in northern Guinea will start to ramp up and bring Simandou's total annual iron ore production to 50 million tons.

Vale is still devising a plan to transport the Zogota iron ore that is produced before the railway link is finished, the senior executive said.

Vale acquired a majority ownership of the mine in April after spending $2.5 billion for a 51% stake in privately held BSG Resources. Blocks 1 and 2 were previously owned by Rio Tinto PLC (RIO, RIO.LN), but the licenses were stripped away by the Guinean government in 2008 because the Anglo-Australian miner failed to develop the project in a timely fashion. Rio was granted the licenses in 2003.

The Guinean government gave the licenses to Israeli diamond merchant Beny Steinmetz, who owns BSG Resources.

Rio Tinto is still developing the undisputed blocks 3 and 4 of the Simandou project and is finalizing an agreement with the Liberian government to develop a similar transport corridor as Vale through Liberia.

Vale's chief executive, Roger Agnelli, said the Brazilian miner hasn't held any discussions with Rio Tinto regarding joint development of a transport corridor.

Separately, Vale is rehabilitating a 330 kilometer Trans-Guinea railway from the interior city of Kankan to the capital and port city, Conakry. The railway line will only be used to haul people and goods; no iron ore from Vale's Simandou project will be transported along the Trans-Guinea rail line, a senior Vale executive said.

-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com
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