Rio Tinto’s Simandou project moves closer to first production

January 8, 2024

Rio Tinto’s Simandou project, a $20 billion iron ore, rail and port development in west Africa is expected to begin production after a 27-year wait.

The Financial Times reported that the project has suffered a number of setbacks including two coups d’état, four heads of state and three presidential elections since the company first secured an exploration license in the Simandou mountains in south-eastern Guinea, 550 km (340 miles) from the coastal capital, in 1997.

Rio Tinto has had six chief executives, lost half the license, fought drawn-out court battles with several corporate rivals, settled corruption allegations with U.S. authorities and even sought to exit the project completely, only for the sale to fall through. Finally, in 2024, once Rio Tinto’s state-owned Chinese partners receive the last approval from Beijing, the company intends to proceed with the project.

“There is nothing else out there of this scale and size,” Rio Tinto’s Bold Baatar told the Financial Times in a recent interview. Although he is officially head of the copper business, for the past seven years Baatar has been the executive responsible for hauling the project’s complex commercial agreements over the line.

The project is too expensive for any single miner to develop alone and is now a partnership between Rio Tinto, the Guinean government and at least seven other companies, including five from China. Rio Tinto will build one iron ore mine — known as the Simfer project — in partnership with a consortium led by the world’s largest aluminium producer, Chinalco. A second mine — known as the WCS project — will be built by Baowu, the world’s biggest steel producer, in partnership with a consortium led by Singapore-based Winning International Group. At the same time, the parties will co-finance the construction of a 552 km (342 miles) railway that will curve through Guinea’s mountainous interior to the sea and the development of a deepwater port on its Atlantic coast. Rio Tinto and the Chinalco consortium must also fund an additional 70 km (44 miles) rail spur to connect its mine with the main line.

“We are continuing to work closely with the Government of Guinea, Chinalco, Baowu and WCS towards full sanction of this world class project by all partners,” Baatar said in a statement. “Simandou will deliver a significant new source of high-grade iron ore that will strengthen Rio Tinto’s portfolio for the decarbonisation of the steel industry, along with trans-Guinean rail and port infrastructure that can make a significant contribution to the country’s economic development.”

In what will be the largest greenfield integrated mine and infrastructure investment in Africa, more than 600 km (372 miles) of new multi-use rail together with port facilities will be co-developed by the Republic of Guinea, Simfer and WCS. This will allow the export of up to 120 Mt/a (132 million stpy) of mined iron ore by Simfer and WCS from their respective Simandou mining concessions in the southeast of the country.

The Simfer joint venture’s mine concession held an estimated total mineral resource as at Dec. 31 2022 of 2.8 Gt (3 billion st), of which Rio Tinto is reporting the conversion of an estimated 1.5 Gt (1.65 billion st) to ore reserves that support a mine life of 26 years, with an average grade of 65.3 percent iron and low impurities. Rio Tinto is also reporting mineral resources exclusive of ore reserves of 1.4 Gt (1.54 billion st) at 66.1 percent Fe and low impurities.

First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualized capacity of 60 Mt/a (66 million stpy) (27 Mt or 29.7 million st Rio Tinto share). The mine will initially deliver a single fines product before transitioning to a dual fines product of blast furnace and direct reduction ready ore.

Simfer's initial capital funding requirement for the Simandou project is estimated to be approximately $11.6 billion, of which Rio Tinto’s share is approximately $6.2 billion.

Photo credit: Rio Tinto


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