Simandou ‘on-track’ for first production

Rio Tinto chief executive officer Jakob Stausholm has discussed the progress of the company’s growth projects at the company’s annual general meeting (AGM).

Stausholm said the company’s Simandou operation in Guinea remains on-track for first iron ore production by the end of 2025.

Just before Stausholm’s address, Rio chair Dominic Barton, in the same breath, called Simandou “one-of-a-kind” and “complex”, capturing both the significance and sophistication of the mine, with more than 600km of trans-Guinean railway being built to get the operation up and running.

This highlights the treasure chest that Rio Tinto and its Simandou partners have discovered, one which lies in the Simandou mountain range spanning more than 100km.

The rich subsoils of Simandou hold an estimated 1.5 billion tonnes of iron ore ore reserves at a grade of 65.3 per cent iron (Fe).

Rio has an appetite for tackling the most difficult projects, recognising the sheer upside before being overwhelmed by the complexity.

You could place the Jadar lithium project in Serbia, which remains at a standstill, and the Rincon project in Argentina in that basket, the latter of which would see Rio add a new string to its bow in the form of lithium brine production.

The Oyu Tolgoi copper operation in Mongolia is no easy feat either. Stausholm elaborated on the scale of this project.

“Just over a week ago, the Mongolian President and I stood 1.3 kilometres below the Gobi Desert on the same spot where the start of underground production was announced exactly two years before,” he said.

“It is remarkable how far Oyu Tolgoi has come in that time, as it ramps up to peak production of 500,000 tonnes of copper a year. The President described it as one of the most exciting developments he had ever seen.

“Because Oyu Tolgoi is a modern, safe and sustainable mining operation built by 20,000 Mongolians, it demonstrates best operator excellence in action.”

The AGM also provided Rio shareholders the opportunity to vote on the company unifying its dual-listed structure, following concerns raised by shareholder Palliser Capital.

The Rio board strongly urged its shareholders to vote against unification, suggesting it would “destroy value” for its investors.

The results of this vote hadn’t been announced at the time of writing.

The company noted that less than 80 per cent of votes favoured Resolution 22 ‘Authority to purchase Rio Tinto plc shares’, with Shining Prospect, a subsidiary of the Aluminium Corporation of China (Chinalco), voting against it.

“Chinalco has not sold any of its shares in Rio Tinto plc and now has a holding of over 14 per cent given its non-participation in the company’s significant share buyback programmes,” Rio said.

“This places Chinalco close to the 14.99 per cent holding threshold agreed with the Australian Government at the time of its original investment in Rio Tinto.”