* Companies failed to reach agreement over price
* Initially valued at $500-600 mln, but the value has fallen
* B&A worried about risks of working in Guinea -source
By Silvia Antonioli and Anjuli Davies
LONDON, Feb 25 Brazilian mining firm B&A
Mineração has pulled out of talks to buy BHP Billiton's
stake in the Mount Nimba iron ore deposit in Guinea, bank and
industry sources said, in the latest sign that projects in
riskier countries have become a tough sell.
B&A Mineração lost interest after lengthy negotiations,
because it found the project too costly, risky and difficult
from an operational and political perspective, the sources said.
Shareholders have been pushing mining companies such as BHP
Billiton to focus on cutting costs and delivering
returns from existing assets rather spend money on developing
large, greenfield projects.
But attempts to sell assets in risky countries are proving
increasingly difficult in an environment of weaker metals prices
and reduced risk appetite in the mining business.
Questions over Guinea's political stability and whether the
government will allow firms to export through neighbouring
Liberia, which is vital to making mines profitable at current
prices, have complicated investment decisions on its big iron
ore projects, including Mount Nimba and the giant Simandou
One source said he would be surprised to see another company
make an offer for the project after B&A pulled out of talks.
Market sources had initially valued the potential deal at
around $500-$600 million but more recently said its value had
fallen sharply given the gloomier outlook for iron ore prices
and the increasing caution in the mining industry.
BHP decided to pull out of Mount Nimba in 2012 as part of a
withdrawal from iron ore and other projects across West Africa.
BHP, the world's largest miner, owns just over 40 percent in
the venture to develop the Mount Nimba deposit, and gold miner
Newmont owns another 40 percent.
B&A officials could not be reached for comment. BHP declined
NOT THAT EASY
In December 2012 BHP selected B&A Mineração among a small
group of suitors, which included top world steelmaker
ArcelorMittal, as the preferred bidder for its stake
in Mount Nimba.
In October BHP said it was still in talks to sell its stake
The two sides neared an agreement late last year but then
drifted apart on price and some other conditions, the sources
"At the end of the day, I think B&A was afraid of the risk
involved with operating in Guinea," a second source said.
B&A was founded in 2012 by Roger Agnelli, the former chief
executive of Brazilian mining giant Vale, together
with investment bank BTG Pactual, which is controlled
by Brazilian billionaire financier André Esteves.
Agnelli said last year the group had ambitious plans to
invest in fertiliser, iron ore and copper, mainly in Latin
America and Africa.
So far it has bought two assets: the Rio Verde Mineracao
fertiliser group in the Brazilian state of Para and the Cuprum
Resources copper project in Chile.