Agreement Signed for $20B Simandou Iron-ore Project



The potential for development in the project’s growth corridor. (Source: Dobbin International)
The government of Guinea, Rio Tinto, Chinalco and the International Finance Corp., in a joint press statement released on May 26, announced they had signed the Investment Framework (IF) for blocks 3 and 4 of the Simandou iron-ore project, regarded as the largest combined iron-ore and infrastructure project ever to be developed in Africa. The IF provides the legal and commercial foundation for the project.

The Simandou project is located in southeast Guinea. Project participants include the Republic of Guinea (7.5%), Rio Tinto (46.57%), Aluminum Corp. of China (41.3%) and the IFC (4.625%), a member of the World Bank Group. The project comprises three principal components:

• A high-grade iron-ore mine (blocks 3 and 4 of Simandou) expected to produce 100 million tons per year;

• A new 650-km trans-Guinean multiuser railway to transport iron ore to the Guinean coast; and

• A new deep-water multiuser port in the Forécariah prefecture.

Following the signing of the framework, the government of Guinea was expected to quickly submit the IF for consideration of ratification by the Guinean National Assembly. Once ratified, the project partners will finalize, within approximately one year from ratification, a Bankable Feasibility Study.

The project’s railway and port infrastructure will, for the first 30 years of operation, be owned by a new infrastructure company to be called InfraCo. Rio Tinto is currently leading the project partners’ effort to assemble a consortium of investors who, as InfraCo, will finance, build and own the multiuser 650-km railway and deep-water port infrastructure until its eventual transfer to the Republic of Guinea.

When fully operational, the project has the potential to double the country’s current GDP and is expected, at full capacity, to spawn an estimated 45,000 jobs throughout the economy. It also is expected to induce subcontracting and procurement activities, as new and upgraded roads and the development of fiber and wireless communications will underpin indirect economic development for communities along the infrastructure route.

State Minister of Mines and Geology of the Republic of Guinea Kerfalla Yansané said, “Simandou is one of the largest and best quality iron-ore deposits in the world. It has the potential to provide the global market with highly competitive ore for more than 40 years. This estimated $US20 billion project, aiming to develop blocks 3 and 4 of Simandou along with the infrastructure, will boost Guinea’s whole economy and spur our Southern Growth Corridor through mining, agriculture, forestry, livestock and trade. It’s about unlocking our huge potential, supporting our efforts to tackle poverty through jobs creation and economic diversification, and getting more attractive to foreign direct investment.”


As featured in Womp 2014 Vol 06 - www.womp-int.com