$10bn Simandou Africa’s ‘largest-ever integrated project' – Rio Tinto

24th January 2011 By: Martin Creamer - Creamer Media Editor

JOHANNESBURG (miningweekly.com) – Rio Tinto’s Simandou iron-ore project under construction in Guinea will be “the largest integrated mine-and-infrastructure project ever developed in Africa”.

The overall project cost including infrastructure development is expected to top the $10-billion mark.

Simandou alone will make West Africa one of the world’s foremost iron-ore exporters, comparable with established producers like Brazil and Australia.

Production, at a planned 95-million ton a year, is expected to begin within five years.

Of the 1 600 people currently working on the project, 90% are Guinean.

There will be 13 000 jobs at the peak of construction and an eventual 4 000 core mining jobs.

The project is being built in partnership with the Chinese State-owned company Chinalco, the World Bank’s International Finance Corporation (IFC) and Rio Tinto, headed by CEO Tom Albanese.

“This represents a significant vote of confidence on the potential of Africa and one we believe will encourage other investors and catalyse economic activity more broadly,” Rio Tinto says in an emailed response to Mining Weekly Online.

The iron-ore deposits at Simandou are seen as being potentially transformative for Guinea, provided the project partners and the government develop them in the “right way”.

The “right way” is seen to involve a commitment to a stable and predictable investment climate; a safe and healthy operating culture; the protection of the surrounding biodiversity; and the effective management of issues such as inbound migration and local inflation.

“We are ramping up our on-ground infrastructure development around the mine in 2011, and have just appointed a major construction contractor – Fluor – to help achieve this,” Rio Tinto tells Mining Weekly Online.

Early preparation under way includes the refurbishment of national roads between Beyla and Nzerekore, the establishment of vocational training centres in Conakry and Beyla, the development of service and construction wharfs near Forecariah, and the building of small power generation facilities near the Macenta and Beyla communities.

The 20% interest that the Guinean government is expected to take up will proportionally reduce the effective interests of Rio Tinto, Chinalco and the IFC.

“We are keen to get this massive and complex project into operation as soon as practicable,” says Rio Tinto, which has, to date, invested some $700-million in Simandou, including $45-million in regional development.