The board of Rio Tinto has given the nod to the Simandou iron-ore project, in Guinea, CEO Jakob Stausholm revealed in the group’s half-year results announcement.
The approval encompasses Rio Tinto’s share of the Simandou investment, totalling $6.2-billion. The company had already spent $0.5-billion towards critical path works by the end of 2023, with the remaining expenditure set at $5.7-billion.
Rio Tinto’s share of costs will be about $2-billion this year.
While the green light is a key step, Stausholm emphasised that board approval was contingent on meeting outstanding conditions. These included securing approvals from joint venture (JV) partners and obtaining regulatory nods from China and Guinea.
He added that Rio Tinto was engaging with authorities in Guinea, following the dissolution of the government.
“We have been in Guinea for 50 years, and we have safely continued our operations throughout. We expect that will continue to be the case.”
Stausholm expressed enthusiasm for Simandou, which he visited last week, stating, “We are working with our partners towards full sanction of Simandou, and we are really excited about this project. We have much more work to do, but we are already well-positioned to continue delivering value to our shareholders.”
Rio Tinto’s involvement in the megaproject revolves around its ownership of two of the four mining blocks, forming part of the Simfer JV alongside China’s Chalco Iron Ore Holdings (CIOH) and the Guinea government. Rio Tinto has a 53% stake, while CIOH holds the balance.
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%.
Simfer will own, develop and operate a 60-million-tonne-a-year mine in blocks 3 and 4 of the Simandou project and WCS is developing blocks 1 and 2.
First production from the Simfer mine is expected in 2025, ramping up over 30 months.
Stausholm pointed out that Simandou’s high-grade, low-impurity formation was a rare opportunity for Rio Tinto to diversify and grow its portfolio, particularly as demand increased for grade suitable for greener steel.