Rio Tinto Secures Approvals For Simandou Iron Ore Project In Guinea

(RTTNews) - Rio Tinto has announced that all conditions for its investment to develop the Simandou high-grade iron ore deposit in Guinea have been satisfied, including the necessary regulatory approvals from Guinea and China. The transaction is expected to be completed during the week of 15 July 2024.

Alongside the recent approval by the Board of Simfer, this approval enables Simfer to invest in and fund its share of the co-developed rail and port infrastructure, a collaborative effort with Winning Consortium Simandou (WCS), Baowu, and the Republic of Guinea.

As per the terms of the transaction, Simfer will acquire a participation in the WCS project companies constructing rail and port infrastructure, commit to perform a portion of the construction works itself and commit to funding its share of the overall co-developed infrastructure cost, in an aggregate amount of approximately $6.5 billion (Rio Tinto share approximately $3.5 billion).

Chalco Iron Ore Holdings Ltd (CIOH) has now paid its share of capital expenditures incurred or required by Simfer to progress critical works up to completion.

The co-developed infrastructure capacity and associated cost will be shared equally between Simfer, which will develop, own and operate a 60 million tonne per year mine in blocks 3 and 4 of the Simandou Project, and WCS, which is developing blocks 1 and 2.

Under the co-development arrangement, Simfer will construct the approximately 70 kilometre Simfer spur rail line and a 60 million tonne per year transhipment vessel (TSV) port, while WCS will construct the dual track approximately 536 kilometre main rail line, the approximately 16 kilometre WCS spur rail line and a 60 million tonne per year barge port.

Once complete, all co-developed infrastructure and rolling stock will be transferred to and operated by the Compagnie du Transguinen (CTG) joint venture, in which Simfer and WCS each hold a 42.5% equity stake and the Guinean State a 15% equity stake.

First production from the Simfer mine is expected in 2025, ramping up over 30 months to an annualised capacity of 60 million tonnes per year (27 million tonnes 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 capital funding requirement for the Simandou project as a whole is estimated to be approximately $11.6 billion, of which Rio Tinto's share is approximately $6.2 billion.