Guinea strikes deal with miners to resume Simandou iron ore development

Band Saliou Samb

CONAKRY, March 27 (Reuters)Guinea’s ruling junta has struck a deal with Rio Tinto and a Chinese-backed consortium to resume operations at the massive Simandou iron ore deposit, the mines minister said, after resolving disputes over of infrastructure.

Simandou holds over 4 billion tonnes of ore according to the Guinean government, making it the largest known deposit of its kind, but despite the very high grade of the ore, Simandou remains untapped decades after its discovery, largely in due to legal disputes and political instability.

Guinea’s transitional authorities said this month that development of the site would be halted as they sought clarification on how Guinea’s interests would be safeguarded. M1L2N2VE0ES

The government’s decision was seen as a way to pressure Rio and Winning Consortium Simandou to find a way to collaborate on the expensive infrastructure needed to transport the ore from Simandou to the port.

Mines Minister Moussa Magassouba said on state television on Saturday evening that a framework agreement had been signed between the government and the companies involved in the project: Rio Tinto, the Aluminum Corp of China (Chinalco) and the China-backed SMB-Winning Consortium.

He said the companies had “put aside many egos, many other interests to get back to what is a win-win partnership for all parties”.

Magassouba said infrastructure projects are to be completed by December 2024 and commercial production to begin by March 31, 2025, a timeline analysts say is ambitious given the scale of the infrastructure to come. to construct.

The deal was primarily for the development of a 670 km (419 mile) railway from the Simandou site to a new deep-water port, a plan which Magassouba said would cost around $15 billion.

He said the government had negotiated and secured 15% stakes in the railway, port and mines, while the new infrastructure would become Guinean state property when completed.

“This framework agreement will allow the joint development of this gigantic project (…) and will allow the acceleration of the process and a resumption of work”, declared Fadi Wazni, chairman of the board of directors of the SMB-Winning consortium.

“The framework clearly outlines the key principles for all parties to work together on infrastructure co-development and outlines how the project will be constructed in accordance with international environmental, social and governance standards,” said Bold Baatar, Head of Copper at Rio Tinto. in statement.

Rio Tinto has held the rights to Simandou since 1997. It has a 45.05% stake in the southern half, Blocks 3 and 4, of the deposit, with Chinalco holding 39.95% and the Guinean government the remaining 15%.

SMB-Winning won a government tender in November 2019 for blocks 1 and 2.

Once fully operational, Simandou is expected to produce 100 million tonnes of iron ore per year – with blocks 1 and 2 producing 60 million tonnes per year and the Rio blocks producing 40 million per year, JP Morgan analysts said more early this month.

(Reporting by Saliou Samb, additional reporting by Helen Reid Writing by Cooper Inveen; Editing by Bate Felix, Elaine Hardcastle)

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