HomeBase MetalsRio Tinto and Chinalco sign $20bn Guinea iron ore deal

Rio Tinto and Chinalco sign $20bn Guinea iron ore deal

Today in Conakry, the Government of Guinea and its partners, Rio Tinto, Chinalco and the IFC, signed the Investment Framework (IF) for blocks 3 and 4 of Simandou, the Project, which will be the largest combined iron ore and infrastructure project ever developed in Africa, providing Guinea with the opportunity to reap the benefits of its rich mineral wealth and transform its wider economy.

The signing marks a significant milestone and provides the legal and commercial foundation for the project. It also allows the project to move towards realizing the opportunities it presents for Guinea and all the shareholders.

Within the coming days, the Government of Guinea will submit the IF for the consideration of the Guinean National Assembly in order to seek its ratification. Once ratified the project partners will finalize, within approximately one year from ratification, the Bankable Feasibility Study which will confirm all the project parameters including cost and timeline.

In parallel, the parties, under the leadership of Rio Tinto, are working together to assemble a consortium of investors who will finance, build and own the multi-user 650km railway and deep-water port infrastructure within the agreed timeframe and along procedures laid down by the Bankable Feasibility Study and involving all parties.

When fully operational, the project has the potential to double the country’s current GDP. The project will create significant employment and, at full capacity, will stimulate an estimated 45,000 jobs throughout the economy. It will also induce subcontracting and procurement activities. New and upgraded roads and the development of fibre and wireless communications will underpin indirect economic development for communities along the infrastructure route (“Southern Growth Corridor”).

President of the Republic of Guinea Alpha Condé said: “With massive infrastructure investment, this Project is of critical importance for the people of Guinea. It’s a nationwide priority that goes beyond the mines and far beyond our generations. With transparent and fair deals, our mining sector has the potential to be a game changer for Guinea. This Project also represents a symbol of our continent’s tremendous efforts to meet its infrastructure challenges and build inclusive growth”.

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”.

Sam Walsh, Rio Tinto Chief Executive said: “Today is an important milestone in the development of this world-class iron ore resource for the benefit of all shareholders and the people of Guinea. I would like to welcome the Government of Guinea as a shareholder and thank the President for his continued commitment to the Project.”

Alan Davies, Chief Executive of Diamonds & Minerals Rio Tinto said: “The signing of the IF is testimony to the commitment of all the partners to progress the Project and is the culmination of years of collaborative and tremendous work. We will now concentrate on progressing the plans for the development of the mine and pulling together the consortium of investors who will finance and develop the infrastructure.”

SUN Zhaoxue-General Manager of Chinalco said: “China and Guinea maintain traditional friendly relations, the two countries are highly economically complementary, Guinea has rich iron ore resources while China is the world’s largest iron ore consumer. The signing of Simandou Investment Framework is of great importance, and Chinalco is willing to work with all the partners, to implement respective responsibilities and obligations to achieve earliest first commercial production and full capacity production of the project, which will benefit the State of Guinea and Guinean people.”

“This Project is a priority for IFC, given its potential to bring jobs, infrastructure and revenues to Guinea,” said Jin-Yong Cai, IFC Executive Vice President and CEO. “Projects of this scale require strong partnerships. This agreement is a testament to the strong collaboration of the Project partners, including the Government of Guinea, in developing a framework that will bring long-term positive benefits to the country.”

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