The Simandou iron ore project in Guinea has received a boost after its joint venture (JV) partners, including Rio Tinto, inked a non-binding agreement to initiate the next phase of development.
As reported by Reuters, Rio and Baowu Resources Co have signed a term sheet to advance Rio’s infrastructure JV with Winning Consortium Simandou (WCS) to the next stage where a shareholder agreement, cost estimates and regulatory approvals would need to be achieved.
No further details were provided on the non-binding agreement, but Rio said the project partners were committed to meeting “international recognised ESG standards” and helping Guinea benefit economically.
Leading Chinese steelmaker China Baowu Steel Group Co – of which Baowu Resources is a subsidiary – confirmed the term sheet in a statement on its WeChat account before Christmas.
Simandou’s development linchpin has been the project’s rail and port infrastructure. Once developed, rail will extend more than 600km and connect Simandou with a new deepwater port in the Forécariah prefecture in Maritime Guinea, presenting a significant economic opportunity for the West African nation.
Rio Tinto was first granted a Simandou exploration licence in 1986. The project’s development has since been plagued with obstacles, with political complexities, cost concerns and mining rights disputes presen ting major roadblocks.
Once up and running, Simandou would be the largest iron ore project of its kind in the world, with the potential to produce more than 100 million tonnes per year.
Simandou is split into north and south blocks. North blocks 1 and 2 are held by WCS, while the south blocks 3 and 4 are held by Simfer Jersey (85 per cent stake) and Guinea Government (15 per cent stake).
Simfer Jersey is a JV between Rio Tinto (53 per cent stake) and the Chinalco-led Chalco Iron Ore Holdings (47 per cent stake).