Rio Tinto has achieved a significant milestone in the development of the Simandou high-grade iron ore deposit in Guinea, meeting all necessary conditions for investment, including regulatory approvals from both Guinean and Chinese authorities. The completion of this transaction is anticipated during the week of July 15, 2024.
This progress, bolstered by the recent approval from the Board of Simfer, paves the way for Simfer to finance its share of co-developed rail and port infrastructure. This venture is in collaboration with the Winning Consortium Simandou (WCS), Baowu, and the Republic of Guinea. The project will see the construction of over 600 km of new multi-use trans-Guinean railway and port facilities, enabling the export of up to 120 million tonnes per annum (tpa) of iron ore from the Simandou mining concessions.
Rio Tinto’s Executive Committee lead for Guinea and Copper Chief Executive Bold Baatar expressed gratitude for the partnerships that have brought this project to fruition, stating, “Simandou will deliver a significant new source of high-grade iron ore that will strengthen Rio Tinto’s portfolio for the decarbonisation of the steel industry, along with trans-Guinean rail and port infrastructure that can make a significant contribution to the country’s economic development.”
Under the terms of the agreement, Simfer will invest in and co-develop the infrastructure, committing approximately US$6.5 billion, with Rio Tinto’s share being around US$3.5 billion. Chalco Iron Ore Holdings Ltd (CIOH) has already fulfilled its capital expenditure commitments to Simfer, with payments amounting to approximately US$985 million for expenditures up to the end of 2024.
The infrastructure project, the largest greenfield integrated mine and infrastructure investment in Africa, will be shared equally between Simfer and WCS. Simfer will develop, own, and operate a 60 million tpa mine in blocks 3 and 4 of the Simandou Project, while WCS will manage blocks 1 and 2. The co-development arrangement includes the construction of a 70 km Simfer spur rail line and a 60 million tpa transshipment vessel port by Simfer, and a dual track 536 km main rail line, a 16 km WCS spur rail line, and a 60 million tpa barge port by WCS.
Upon completion, the infrastructure and rolling stock will be transferred to and operated by the Compagnie du Transguinéen (CTG) joint venture, with equity stakes held by Simfer and WCS (42.5% each) and the Guinean State (15%). The first production from the Simfer mine is expected in 2025, with a ramp-up to an annualized capacity of 60 million tpa over 30 months. Initially, the mine will produce a single fines product, transitioning to dual fines products suitable for both blast furnace and direct reduction processes.
This monumental project not only promises to significantly boost Guinea’s economy but also enhances Rio Tinto’s role in the global iron ore market, supporting the steel industry’s shift towards decarbonization.