Visit Our Sponsors |
The development of the world’s biggest untapped iron ore deposit came another step closer after Rio Tinto Plc and its consortium partners agreed to a pact with the Guinea government over building a crucial rail line.
The Simandou project in Guinea has some of the richest iron ore deposits in the world, but its development has been stymied for years by a litany of disputes over ownership and infrastructure, as well as political changes in Guinea. Yet, over the last 12 months, a series of agreements have moved its development closer.
Rio said August 11 that it had struck a deal with Guinea and the Winning Consortium Simandou — which is building another project at Simandou — to develop the 600 kilometers (373 miles) of rail lines needed to transport the iron ore to the port.
Simandou is divided into four blocks, with blocks one and two controlled by the Winning Consortium Simandou, backed by Chinese and Singaporean companies. Rio and the Aluminum Corp. of China, known as Chinalco, own blocks three and four.
Read more: Codelco and Anglo American Discuss Mining Pact to Lift Copper Output in Chile
The two parties have been in discussions about shared access to the railway, as well as other areas such as the environmental impact. Rio said August 11 that rail and port capacity and the costs of building them will be shared equally between the two consortia.
Rio said in 2022 that its share of the project would be roughly $4 billion. It offers the world’s number two miner a potentially huge new source of supply as the company looks to grow its most profitable business.
“With these agreements, we have reached an important milestone towards full sanction of the Simandou project,” Bold Baatar, Rio’s executive in charge of the project, said August 11.
Guinea has shown flexibility in the project schedule that makes room for extending the commencement of production by a year to the first quarter of 2026, Gerard Rheinberger, Rio’s managing director for Simandou, told reporters in Guinea’s capital, Conakry on August 11. The extending will only be considered in case of force majeure, he said.
The initial agreement signed by the partners in 2022 sets December 2024 for the completion of construction of the mine and the infrastructure and the start of production in the first quarter of 2025.
RELATED CONTENT
RELATED VIDEOS
Timely, incisive articles delivered directly to your inbox.