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Simandou iron-ore project, Guinea – update

Aerial viw of the Simandou project

Photo by ©Rio Tinto

9th February 2024

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Simandou iron-ore project.

Location
Guinea.

Project Owner/s
Simandou’s mining concession is divided into four blocks.

The project is a partnership between Rio Tinto, Chalco Iron Ore Holdings (CIOH), a Chinalco-led consortium, Winning Consortium Simandou1 (WCS), Baowu and the Guinea government.

Simfer Jersey Limited is a joint venture (JV) between the Rio Tinto Group (53%) and CIOH (47%). CIOH is a Chinalco-led JV of leading Chinese State-owned enterprises: Chinalco (75%), Baowu (20%), China Rail Construction Corporation (2.5%) and China Harbour Engineering Company (2.5%).

Simfer is the holder of the mining concession covering Simandou blocks 3 and 4, and is owned by the Guinean State (15%) and Simfer Jersey Limited (85%). Simfer Infraco Guinée will deliver Simfer’s scope of the co-developed rail and port infrastructure, and is a wholly owned subsidiary of Simfer Jersey Limited, but will be co-owned by the Guinean State (15%) after closing of the co-development arrangements.
 
WCS is a consortium of Singaporean company Winning International Group (50%), Weiqiao Aluminium (50%, part of the China Hongqiao Group) and United Mining Supply Group (nominal shareholding). WCS is the holder of Simandou North blocks 1 and 2 (with the government of Guinea holding a 15% interest in the mining vehicle and WCS holding 85%), and associated infrastructure. Baowu Resources has entered into an agreement to acquire a 49% share of WCS mine and infrastructure projects through a Baowu-led consortium, subject to conditions, including regulatory approvals. In the case of the mine, Baowu has an option to increase its shareholding  to 51% during operations.

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

The Simfer JV’s mine concession holds an estimated 2.8-billion-tonne mineral resource, 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%.

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.

Simandou’s blocks 1 and 2 are expected to produce 60-million tonnes a year, and Rio's blocks 3 and 4 about 40-million tonnes a year.

The project includes an estimated 670 km railway to transport the iron-ore from the mine to the Guinean coast and a new deep-water port south of Conakry, on 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.

New infrastructure will become State property upon completion.

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 60-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 biggest integrated mine-and-infrastructure project ever developed in Africa.

Potential Job Creation
It is estimated that the project will create 10 000 direct jobs and more than 100 000 induced jobs, as well as employ more than 3 500 local subcontractors.

Present Value/Internal Rate of Return
Not stated.

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

Planned Start/End Date
The Simandou project will be completed and put into operation in 2026.

Latest Developments
Guinea’s National Transition Council has approved a JV between Rio Tinto, China-backed Winning Consortium Simandou and government.

The council, which is the equivalent of a parliament body in the West Africa nation, has voted and approved plans that include building a mine, rail line and port in Simandou by December 2025.

First production is expected in 2026; the goal is also to build a steel factory and pellet plant in the 2030s.

The JV will be subject to financial penalties if it fails to meet construction deadlines approved as part of the JV agreement.

“Guinea reserves the right to cancel, without any compensation, mining permits and infrastructure agreements relating to port and rail line works one year from the start of the application of penalties,” Guinea’s National Transition Council spokesperson Mory Dounoh has said.

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

Contact Details for Project Information
Chinalco, tel +86 10 8229 8103, fax +86 10 8229 8081 or email info@chinalco.com.cn.
Rio Tinto, email media.enquiries@riotinto.com.

Edited by Creamer Media Reporter

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