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After almost three decades of waiting, the ambitious mining project in Simandou, in southeastern Guinea, finally becomes a reality. Rio Tinto, in collaboration with other mining companies, is leading this long-awaited venture.
More than 27 years ago, Rio Tinto received the concession to explore the riches of the Simandou mountains, located in southeastern Guinea. At that time, the vision was to implement an ambitious mining project that included the creation of two iron ore mines, the construction of a railway and the construction of a new port, in addition to the construction of dozens of bridges and tunnelss. The estimated total investment was around US $ 20 billion. This landmark development is finally taking shape after nearly three decades of planning.
Mining project in Simandou could be off the ground soon
Since then, however, a series of setbacks, including three coups d'état in the African country, postponed the Anglo-Australian mining company's plans and the idea never got off the ground. However, now it appears that this is about to change.
O Financial Times stated today that Rio Tinto plans to begin work on the mining project this year, and that it has already received authorization from Beijing to begin. According to the FT, some workers are already working on the railway in Simandou, and the idea is to begin construction of the mines soon.
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Rio Tinto's expectation is that the first dispatch of iron ore happen in 2025, with production reaching its maximum capacity of 60 million tons per year in 2028. BTG Pactual stated in a report that it has always been very cautious regarding the development of Simandou, given all the setbacks the project has faced.
Because of this, the bank is assuming more conservative assumptions, projecting that ore extraction will begin in 2026 and will only reach maximum capacity in 2030. The bank also stated that the challenges of the project should not be underestimated, as Guinea has suffered a military coup in 2021 and the country faces regulatory instability.
Railway for the mining project will be 552 km long
Given the size of the project in Simandou, which is too expensive for a mining company to finance alone, it will be developed in a partnership between Rio Tinto, the Government of Guinea and at least seven other companies, including five Chinese.
The FT said Rio Tinto will build one of the mines, known as the Simfer project, in partnership with a consortium led by Chinalco. The second mine, known as the WCS project, will be developed by Baowu, the world's largest steel producer, in partnership with a consortium led by Winning International Group, a Singaporean company.
At the same time, the companies involved together financed the construction of the railway, which will be 552 km long and will connect the Simandou mountains to the sea, where a new port will be built to transport production. Rio Tinto and the Chinalco consortium will also have to finance an additional 70-kilometer stretch of railway that will connect their mine with the main railway line.
Rio Tinto will invest US$6,2 billion
The estimate is that Rio Tinto's share in the mining project's capex will be around US$6,2 billion, more than the company has invested per year in the last five years. In addition to the superlative numbers, the Simandou project is relevant for the quality of the iron ore found there.
The ore that Rio Tinto plans to extract has an average steel concentration of more than 65%, one of the highest in the world and similar to the Carajás ore, the biggest business in Rio. OK. High-grade ore has become even more valuable in recent years, as it is the only one that can be used in more sustainable steel production processes, the main aim of steelmakers to reduce emissions.
