LISBON, July 11 (Reuters) - Mining giant Rio Tinto has decided not to participate in a planned iron ore project worth over 1 billion euros ($1.23 billion) in Portugal, but the government remains confident it will find prospectors as other foreign firms remain interested, two sources close to the process told Reuters on Wednesday.
"The Moncorvo mines project will go ahead, but most likely without Rio Tinto," said one of the sources, adding that although formally the talks with the Anglo-Australian miner have not ended yet, the result was practically clear. "Rio Tinto is choosing to give up smaller projects and Moncorvo should be one of them."
Portugal's economy ministry and Rio Tinto declined to comment on the issue.
Rio Tinto had looked at Moncorvo, in northern Portugal, which holds one of the largest iron ore deposits in Europe.
But the company has said recently that given rising costs, falling commodity prices and pressure from shareholders to return capital, it is going to invest in a narrower range of mine developments, focusing on iron ore in Western Australia and Guinea and the Oyu Tolgoi copper project in Mongolia.
Portugal, which is going through its worst recession since the 1970s and is under a 78-billion euros IMF/EU bailout, is trying to draw investors to explore its mining resources that range from iron ore to gold, silver and tungsten.
Another source from the sector said the deposits will not remain untapped for long.
"The potential is still there and we have others interested: big mining companies from Brazil, China, Canada and South Korea," the source said.