Rio Tinto has secured all approvals for its investment to develop the $11.6bn Simandou iron mining and related infrastructure project in Guinea.
The company has obtained the required Guinean and Chinese regulatory approvals.
Simandou’s mining concession is split into four blocks. Rio Tinto holds rights to Simandou’s blocks 3 and 4 through Rio Tinto Simfer.
Simfer is a partnership between Rio Tinto with a 53% stake and Chalco Iron Ore (CIOH) holding 47%. CIOH is led by Chinalco with 75%, Baowu with 20%, China Rail Construction with 2.5%, and China Harbour Engineering with 2.5%.
By securing all permits, Simfer will be able to invest in and fund its share of the co-developed rail and port infrastructure being progressed along with Winning Consortium Simandou (WCS), Baowu, and the Guinea government.
Simfer will develop, own, and operate a 60 million tonne per annum mine in blocks 3 and 4 of the Simandou iron ore project while WCS will develop blocks 1 and 2.
The co-developed infrastructure capacity and associated costs will be shared equally between Simfer and WCS.
Of the total capital funding requirement for the Simandou iron project, Rio Tinto’s share is approximately $6.2bn.
Over 600km of new multi-use trans-Guinean railway along with port facilities will facilitate the export of up to 120 million tonnes per year of mined iron ore by Simfer and WCS from their respective Simandou mining concessions.
The initiative is expected to become the largest greenfield integrated mine and infrastructure investment in Africa, said Rio Tinto.
First production from the Simfer iron ore mine is slated to be achieved in 2025.
The mine will initially produce a single fines product and later transition to dual fines products suitable for blast furnace and direct reduction.
As part of the deal, Simfer will invest in the WCS project firms that will build rail and port infrastructure. Simfer will also handle some construction and fund its share of costs, totalling about $6.5bn, which includes Rio Tinto’s share of about $3.5bn.
CIOH made an initial payment of about $410m for expenses up to the end of 2023 followed by a second payment of about $575m for 2024 expenses. These payments cover all costs incurred by Simfer up to now.
After completion, all co-developed infrastructure and rolling stock will be transferred to and operated by the Compagnie du Transguinéen (CTG) JV.
Simfer and WCS will each have a 42.5% equity stake in the CTG JV while the Guinean state will hold a 15% equity stake.
Rio Tinto Guinea and Copper executive committee lead and copper chief executive Bold Baatar said: “We thank the Government of Guinea, Chinalco, Baowu and WCS for their partnership in reaching this milestone towards developing the world class Simandou project.
“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.”
