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Simandou iron-ore project, Guinea

8th July 2016

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

  

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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 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.

Net Present Value/Internal Rate of Return
Not stated.

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
Rio Tinto has shelved its $20-billion Simandou iron-ore project because of a sustained slump in prices, the company's new CE Jean-Sebastien Jacques has said in an interview with The Times newspaper.

Rio Tinto has declined to comment on the article.

The miner has been seeking financing for Simandou, even after a $1.1-billion writedown on the project in February. Rio submitted a feasibility study on the project to the Guinean government in May this year.

However, global oversupply of iron-ore has made the project inviable at this time, Jacques told The Times.

However, the Guinea government has said Rio must honour its commitment to develop the iron-ore deposit.

Guinea is counting on Rio and other investors, including Aluminum Corporation of China and International Finance, to meet their funding commitments for the Simandou project, the Mining Ministry has said in an e-mailed statement to Reuters.

Government is “convinced” that a financing solution will be found.

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.
 
 

Edited by Creamer Media Reporter

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