Brazil's mining giant Vale, the world's leading iron ore producer, announced Friday that it had acquired a 51-percent stake in a BSG Resources Ltd. (BSGR) subsidiary in Guinea.

BSG Resources (Guinea) Ltd., the BSGR subsidiary, holds indirectly iron ore concession rights in Guinea's Simandou South (Zogota), and iron ore exploration permits in Simandou North and Blocks 1 and 2.

Vale said it would pay a total of 2.5 billion US dollars for the assets, in an all-cash transaction, of which 500 million dollars are payable immediately and the remaining 2 billion dollars on a phased basis upon further achievements.

According to Vale, Simandou Blocks 1 and 2 and Zogota are among the world's best undeveloped sources of high-grade iron ore with potential to support the development of a large-scale long-lived project, with low capex and operating costs.

The joint venture established by Vale and BSGR will implement the Zogota project and conduct a feasibility study for Blocks 1 and 2, with the creation of a logistics corridor for shipment through Liberia.

In order to be granted the right to ship through Liberia, the joint venture committed to renovate 660 km of the Trans-Guinea railway for passenger transportation and light commercial use.

Vale said it would be responsible for management control and marketing of the joint venture, believing that this new initiative will enhance its leadership in the global iron ore industry and create significant shareholder value over the long-term.