Rio Tinto Board of Directors has approved the investment in the Simandou iron-ore project in Guinea, said CEO Jakob Stausholm during the company’s half-year results announcement.
The board approval is contingent on meeting certain conditions, including approvals from joint venture (JV) partners and regulatory approvals from China and Guinea.
It allows Rio Tinto to spend its share of investment in Simandou development, totalling $6.2bn.
The company has already spent $0.5bn towards critical path works by the end of 2023, with the remaining expenditure set at $5.7bn, and its share of costs about $2bn this year.
Rio Tinto, as part of the Simfer JV, owns two of the four mining blocks, representing a 53% stake, alongside China’s Chalco Iron Ore Holdings (CIOH) and the Guinea government.
In December last year, the mining company announced its plans to spend around $6.2bn for the infrastructure development at the project, including Simfer mine and rail and port.
The company aims to begin iron ore production from the $20bn development as early as 2025.
Stausholm said: Rio Tinto is engaging with authorities in Guinea, following the dissolution of the government. We have been in Guinea for 50 years, and we have safely continued our operations throughout. We expect that will continue to be the case.”
“We are working with our partners towards full sanction of Simandou, and we are really excited about this project. We have much more work to do, but we are already well-positioned to continue delivering value to our shareholders.”
The mine concession owned by Simfer JV holds an estimated 2.8 billion tonnes of mineral resources, of which 1.5 billion tonnes were converted to ore reserves that support a mine life of 26 years, with an average grade of 65.3%.
The JV will own, develop, and operate blocks 3 and 4 of the Simandou project, while Winning Consortium Simandou (WCS) and the government of Guinea will operate blocks 1 and 2.
Simandou’s high-grade, low-impurity formation allows Rio Tinto to diversify and expand its portfolio, as demand for suitable grade increased for greener steel, said Stausholm.
