After settling infrastructure disputes, Guinea’s ruling junta has secured an agreement with Rio Tinto and a Chinese-backed consortium to resume operations at the massive Simandou iron ore deposit, according to the Mines minister.
According to Guinea’s government, Simandou has more than 4 billion tonnes of ore, making it the world’s largest known deposit of its sort. However, despite the high-grade ore, Simandou remains untapped decades after its discovery, owing to legal challenges and political instability.
Guinea‘s transitional authorities announced earlier this month that construction on the site would be paused while they sought clarification on how Guinea’s interests would be protected.
The move was seen as a method for the government to put pressure on Rio and the Simandou to work together on the costly infrastructure required to transport ore from Simandou to the port.
Late Saturday, Mines Minister Moussa Magassouba announced on state television that a framework agreement had been reached between the government and the project’s three companies: Rio Tinto, Chinalco, and the Chinese-backed SMB-Winning consortium.
He said the companies had “put aside many egos, many other interests to return to what is a win-win partnership for all parties.”
Infrastructure projects must be completed by December 2024, and commercial production must begin by March 31, 2025, according to Magassouba, an ambitious timeframe given the size of infrastructure that needs to be erected, according to analysts.
The arrangement focused on building a 670-kilometre railway from the Simandou site to a new deep-water port, which Magassouba estimated would cost $15 billion.
He stated the government had negotiated and gained 15% stakes in the rail, port, and mines, and that once completed, the new infrastructure would become Guinean national property.
“This framework agreement will allow the joint development of this gigantic project … and allow the acceleration of the process and a resumption of work,” Fadi Wazni, chairman of SMB-Winning consortium board, said.
Since 1997, Rio Tinto has owned the rights to Simandou. It holds 45.05 percent of the deposit’s southern half, Blocks 3 and 4, while Chinalco owns 39.95 percent and Guinea’s government owns the remaining 15%.
In November 2019, SMB-Winning won a government tender for Blocks 1 and 2.
Simandou is expected to generate 100 million tonnes of iron ore per year once fully operational, with blocks 1 and 2 generating 60 million tonnes and Rio’s blocks producing 40 million, according to JP Morgan analysts earlier this month.