Rio Tinto has given the green light to develop the Simandou high-grade iron ore deposit in Guinea, west Africa.
The world’s largest iron ore producer said Tuesday that all conditions have now been satisfied for Rio Tinto’s investment to develop what is the world’s largest new mine project.
The transaction is expected to be completed sometime this week, the miner said.
Simandou is divided into two mines controlled by two joint ventures.
The first is the Simfer alliance, 53% owned by Rio Tinto and various Chinese companies. The second, Winning Consortium Simandou (WCS), is solely controlled by Chinese interests.
Clarksons Securities recently calculated that at full capacity, the project could provide employment for up to 170 capesize bulkers annually.
Rio Tinto’s decision allows Simfer to invest in and fund its share of co-developed rail and port infrastructure.
More than 600 km of new multi-use trans-Guinean railway, together with port facilities, will allow the export of up to 120m tonnes per year of mined iron ore.
Rio Tinto executive committee lead for Guinea and copper chief executive Bold Baatar said: “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 transaction, Simfer will acquire a participation in the WCS project companies constructing rail and port infrastructure, commit to perform a portion of the construction works itself and commit to funding its share of the overall co-developed infrastructure cost, in an aggregate amount of about $6.5bn of which Rio Tinto’s share will be about $3.5bn.
Under the co-development arrangement, the Simfer consortium and WCS will, in addition to various railway infrastructure, be responsible for the construction of a 60m tonne per year transhipment vessel port and barge port, respectively.
Once complete, all co-developed infrastructure and rolling stock will be transferred to and operated by the Compagnie du Transguineen (CTG) joint venture, in which Simfer and WCS each hold a 42.5% equity stake and the Guinean state a 15% equity stake.
Ownership of the rail and port infrastructure will transfer from CTG to the Guinean state after a 35-year operations period, with Simfer retaining access rights .
First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualised capacity of 60m tonnes per year, of which Rio Tinto’s share will be 27.5m tonnes.
