Rio says Simandou JV formed, Chalco makes $1.35bn payment

25th April 2012 By: Creamer Media Reporter

JOHANNESBURG (miningweekly.com) – Diversified mining group Rio Tinto and a consortium led by Chalco, a subsidiary of State-owned Aluminium Corporation of China, have completed the Simandou joint venture (JV), after receiving Chinese regulatory approval.

The Chinese approval triggered an earn-in payment of $1.35-billion from Chalco, Rio Tinto said on Wednesday, announcing the finalisation of the JV to develop and operate the 95-million-ton-a-year iron-ore project in Guinea.

Rio and Chalco hold a 53% and 47% interest respectively in the JV, which translates into a 50.35% and 44.65% interest in the project. The private sector arm of the World Bank, the International Finance Corporation, holds the remaining 5% of Simandou.

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

The first shipment of ore from Simandou is planned for mid-2015.

The company also plans a 700 km railway line to transport the ore from the mine to the coast. A new deep-water port is planned about 60 km south of Conakry.

Rio Tinto previously said it expected a total investment of more than $10-billion to bring the mine and associated infrastructure on stream.