Rio Tinto has declared that all prerequisites for its investment in the Simandou high-grade iron ore deposit in Guinea have been met, including the essential regulatory approvals from both Guinea and China. The transaction’s completion is anticipated during the week of July 15, 2024.
Following recent approval from the Simfer Board, this greenlight allows Simfer to invest in and fund its share of co-developed rail and port infrastructure. This collaborative venture includes participation from Winning Consortium Simandou (WCS), Baowu, and the Republic of Guinea.
Under the terms of the agreement, Simfer will obtain a stake in WCS project companies that are constructing the rail and port facilities. Additionally, Simfer will undertake part of the construction work and finance its share of the overall infrastructure development, totaling approximately $6.5 billion, with Rio Tinto’s portion being around $3.5 billion.
Chalco Iron Ore Holdings Ltd (CIOH) has fulfilled its financial obligations, covering the capital expenditures necessary for Simfer to progress crucial works up to completion.
The infrastructure costs and capacity will be evenly divided 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 responsible for blocks 1 and 2.
According to the co-development agreement, Simfer will construct the 70-kilometre Simfer spur rail line and a 60 million tonne per year transhipment vessel (TSV) port. Concurrently, WCS will build the dual-track 536-kilometre main rail line, a 16-kilometre WCS spur rail line, and a 60 million tonne per year barge port.
Upon completion, all co-developed infrastructures, including rolling stock, will be transferred to and operated by Compagnie du Transguinéen (CTG), a joint venture where Simfer and WCS each hold 42.5% equity, and the Guinean State holds a 15% stake.
Initial production from the Simfer mine is projected for 2025, with output ramping up over 30 months to achieve an annual capacity of 60 million tonnes per year (27 million tonnes attributable to Rio Tinto). The mine will begin with a single fines product before transitioning to a dual fines product suitable for blast furnace and direct reduction.
Simfer's total capital requirement for the Simandou project is estimated to be approximately $11.6 billion, with Rio Tinto's share amounting to about $6.2 billion.
