Name and Location
Simandou iron-ore project, Guinea.

Client
Rio Tinto and Chalco, a subsidiary of State-owned Aluminium Corporation, of China, hold a 50.35% and 44.65% interest respectively in the Simandou project. The remaining five per cent is held by the International Finance Corporation.

Guinea retains its options for participation in the project and is expected to take up its first share in the near future.

Project Description
The Simandou project comprises three core elements – a mine, a railway and a port – as well as associated infrastructure.

There will be an openpit iron-ore operation in the Simandou range, in south-eastern Guinea, with an expected peak production of between 95-million and 100-million tonnes a year.

The railway will be about 650 km long to transport the iron-ore from the mine to the Guinean coast.

The port will be located south of Conakry, in the Morebaya river.

Associated developments to provide utilities and supporting infrastructure for the project include construction facilities, access to materials, power generation, water, access roads and accommodation.

Construction of the project will be undertaken in two stages.

The first stage will develop the southern Ouelaba mine site, which will include the construction of the railway and port to a capacity of about 50-million tonnes a year.

The second stage will bring the northern Pic de Fon mine site on line and expand the capacity of rail and port facilities, increasing production to between 95-million and 100-million tonnes a year.

The mine will be the largest integrated mine-and-infrastructure project ever developed in Africa.

Value
A Rio Tinto engineering study conducted on the project estimates capital expenditure at $18.3-billion.

Duration
The first shipment of ore was initially expected by 2015; however, this has been postponed to 2018.

Latest Developments
The government of Guinea has signed a deal with Rio Tinto, Chinalco and the International Finance Corporation, setting out conditions for massive infrastructure investment to revive the giant Simandou iron-ore project.

The agreement on the investment framework does not set a date for the start of production at the long-delayed mine in remote south-eastern Guinea, but it commits the partners to producing a feasibility study within about a year detailing costs and a timeline.

To export the high-grade ore from Simandou South to Guinea's Atlantic coast, the project requires the construction of a 650 km railway through the West African jungle, at an estimated cost of at least $7-billion.

It will also need a deep-water port at Morebaya, costing a further $4-billion, and support infrastructures estimated at a minimum of $2.5-billion, according to documents seen by Reuters. The port and railway will eventually be expanded to handle up to 100-million tonnes of minerals a year.

These documents indictaed that, within 15 months of the framework's ratification by Parliament, Rio and its partners must conclude a financing plan, and on terms with an infrastructure consortium yet to be selected.

Financing must then be put in place within 32 months, at which time the mining consortium will have a date for actually starting production from the mine. The infrastructure will be built and operated by the consortium for 30 years, after which it will revert to the ownership of the Guinean government.

Key Contracts and Suppliers
Fluor (construction contractor) and NRW Holdings (earthworks contract).

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Chinalco, tel +86 10 8229 8103, fax +86 10 8229 8081 or email info@chinalco.com.cn.
Rio Tinto, Mark Shannon, tel +44 20 7781 1178, fax +44 20 7781 1832 or email mark.shannon@riotinto.com.
Fluor, tel +1 469 398 7000 or fax +1 469 398 7255.
NRW Holdings, tel + 61 8 9358 5510 or fax +61 8 9358 5515.