* Guinean government insisting on development plan
* Infrastructure, legal tangles have prevented development
* Major mining personalities show interest in Guinea
By Saliou Samb and Barbara Lewis
CONAKRY/LONDON, Aug 29 (Reuters) - Leading miner BHP is near a deal to divest its stake in Guinea's Nimba iron ore deposit, while three big miners are vying to develop half of the country's Simandou, the largest known untapped iron ore reserve, sources close to the talks said.
Guinea has struggled for decades to extract money from its iron ore, which has been left undeveloped because of protracted legal disputes and the cost of infrastructure.
BHP has also tried for years to sell its stake in the Nimba prospect, which does not fit the company's preference for operating in stable, developed economies. Banking sources, speaking on condition of anonymity, said the price would be insignificant as BHP is keen to seal a deal.
This year, a rise in iron ore prices following cyclone disruption in Australia and reduced output in Brazil after a Vale dam burst in January, combined with a resolution of one of the legal disputes that have blocked Simandou's development, helped to revive interest in Guinea's assets.
In addition to interest in Simandou, there has also been a flurry of interest in smaller iron ore deposits near Guinea's border with Liberia that theoretically could be exported via a much shorter link to the Liberian coast.
Those seeking to develop them are big mining personalities: Mick Davis, chief executive of Britain's ruling Conservative party and former Xstrata boss, Israeli billionaire Beny Steinmetz and another mining billionaire Robert Friedland, who leads HPX, a privately-owned U.S. corporation.
Friedland is the front-runner to buy BHP's stake in Mount Nimba, two sources said on condition of anonymity.
BHP, Friedland and Newmont declined comment, as did Abdoulaye Magassouba, Guinea's mining and geology minister.
A Guinean source close to the talks said they were at "a very advanced stage," while declining to give further details.
In July, Guinea said it had launched a tender for two of Simandou's four blocks.
A government official said three large mining groups were in competition, but declined to name them.
"We received requests from five companies, and in the end three large groups agreed to the terms of the deal and purchased access to the project data," Sadou Nimaga, secretary-general of Guinea's mines ministry, said.
He added that they paid $300,000 for the access and have 45 days, starting from Aug. 19, to prepare bids, which a commission will judge.
The winner has to provide assurances they will develop the deposit, not just leave it in the ground, Nimaga said.
He also reiterated the government's insistence that ore from Simandou would have to be exported via Guinea, which requires a 650 km railway to Guinea's coast. The cost of building that link has previously hindered Simandou's development. (Writing by Helen Reid and Barbara Lewis; editing by Emelia Sithole-Matarise)